The United States Natural Gas ETF (UNG | A-78) has seen total returns of 19 percent year-to-date.
Natural gas has been one of the hottest energy markets this year. In what has been a record-setting winter across many parts of the U.S., demand for natural gas—used for heating—has been solid, putting pressure on inventories and boosting prices.
UNG invests in near-month natural gas futures contracts in a strategy that reflects short-term supply/demand dynamics in the natural gas market. The fund is highly liquid—trading more than $280 million on average a day—and has gathered nearly $900 million in total assets, making it the biggest natgas ETF in the market today.
The natural gas market is currently in backwardation, meaning the nearby futures contract is the most expensive in the futures curve, allowing investors to earn extra return when the position is rolled into other contracts upon expiration.
UNG costs 1 percent in expense ratio and trades with an average spread of 5 basis points, so investors are shelling out roughly $105 per $10,000 invested to own the fund.