Invest In The Natural Gas ETF

By Gordon Hammer

Did you follow natural gas prices this year? The trading range has been from a high of $6 to a low of $2.50 with the market currently trading around $5. A $3.50 yearly trading range is quite large. With that large of a range, a smart investor should be able to profit from it.

Whether you are a trader or investor, you will be able to find the right investment for you in natural gas. This article will show you different ways to trade natural gas. You will find Natural Gas ETFs that invest in stocs of producers,drillers and even futures.

Why should you look at the natural gas market? With the growing concern of carbon emissions' and carbon footprints, natural gas is a cleaner burning fuel and will used more than coal. Natural gas is also plentiful here in the Untied States so there will also be a push to use domestically found energy.

Increasing supplies is another reason to trade natural gas. Recently there have been more discoveries and improved methods of recovering natural gas here in the United States. Many Americans are pushing for tapping into these discoveries as a way to remove our dependence of foreign energy.

The natural gas market has caught the eye of the largest oil company in the world. XTO Energy, perhaps the biggest company in natural gas was purchased by ExxonMobil. If you recall last fall, oil investor T. Boone Pickens was on tv talking about how natural gas is the future for the United States. If people and companies like this are investing in natural gas, perhaps you should be too.

What are Natural Gas ETFs?

ETF is an Exchange Traded Fund. An ETF is similar to a mutual fund. An ETF can be made up of several stocks in that sector. An example would be the SPDR S&P Oil & Gas Exploration & Production ETF, ticker symbol XOP. This fund tries to replicate the total return performance of the S&P Oil and Gas Exploration & Production Select Industry Index. This fund holds stocks in natural gas companies that are involved in exploration and production of natural gas. Some of the stock that make up this fund are ExxonMobil, Chevron, Conocophillips, Occidental an Chesapeake Energy Corp. Please refer to the funds prospectus for the current holdings of the fund.

Perhaps the most popular natural gas etf is the United States Natural Gas Fund. The United States Natural Gas Fund, ticker symbol UNG, invest the entire fund in natural gas futures traded on NYMEX. This is an unleveraged fund and purchases the front month futures contract. When the contract is about to expire, it rolls them into the next contract month.

Thanks for reading this quick outline of the Natural Gas ETF market. This is potentially a very profitable market. - 32373

About the Author:

There are many more ways to trade gas etf .You can read more about natural gas mutual funds

The Difference between Exchange -Traded Funds and Mutual Funds

By Adriana Noton

Smart investing involves understanding the investment terminology. Exchange-Traded Funds (ETFs) and Mutual Funds are used in investment portfolios to add more diversity to the portfolio. By buying one single investment, both ETFs and mutual funds permit a wide range of investment options such as debt as an alternative to equity, foreign currency, country, and industry. Although they are both used to group securities together, there are differences between Exchange-Traded Funds (ETFs) and Mutual Funds.

ETFs trade throughout the trading day, while mutual funds are traded at the end of the day and are typically cashed in or procured at the Net Asset Value which is set on the trading day's closing prices. Unlike conventional mutual funds, ETFs do not have sales loads or investment minimums. As well, ETFs have lower operating expenses than mutual funds; therefore, there is an increased rate of return.

Exchange traded funds perform just as normal stocks do regarding sales and purchases. When investors want to place an order to buy an exchange traded fund, they can place an order for the shares on the market and they will receive the order in the same way as any other stock purchased on the stock exchange. One will have brokerage fees to pay for the purchase or sale of exchange traded funds. Both mutual funds and ETFs have expense ratios. In most cases, exchange traded funds have lower expense ratios than mutual funds. Mutual funds have brokerage commissions based on the particular brokerage firm. Normally, these fees will be much higher than regular stock purchases. However, there are mutual funds available with no transaction fees. ETFs do receive a fee for the cost of a normal trade made at a brokerage. Fees are paid when one buys and sells shares.

Because ETFs produce and cash-in shares that are not considered sales, there are no taxable situations that take place. When a compulsory sale of stock takes place, mutual funds document and allocate more capital gains than ETFs. As well, ETFs are able to reduce or avoid capital gains allocation altogether. ETFs do not have early withdrawal fees, minimums to invest, or minimum holding periods. Mutual funds will normally have various categories of shares such as A, B, or C, which will likely have to be held for a set period of time in order to prevent added fees when selling. Mutual funds are typically required to maintain cash on hand in order to instantly conduct exchanges.

Unlike ETFs, Mutual funds normally cannot be sold short or purchased on margin by an investor. As well, all ETFs can be acquired from nearly any broker while mutual funds will have detailed arrangements with various brokerage firms. ETFs typically have lower managerial and operational expense deductions compared to mutual funds.

Whether one chooses either an Exchange-Traded Fund or Mutual Fund, it will depend on his or her own personal preference. The key to making a sound choice is to understand each type and determine which one will benefit your investment portfolio and your own personal financial needs. - 32373

About the Author:

Whether you're looking for mortgage rates or great GIC rates, with Meridian Credit Union you'll have a customized financial plan that makes sense for you. Just for you.

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