Best/Worst Weekly ETF Returns: UNG Drops 13.5%

June 01, 2012

Natural gas ETFs hit the skids in the week ended May 31, amid a broad pullback in energy prices.

Natural gas ETFs were among the worst-performing funds this past week, adding to what has been a months-long streak of poor performance, succumbing to the weight of investor concerns over what could happen to aggregate demand if the global economy fails to stabilize.

Indeed, mounting fears that the eurozone might crumble as Greece, Spain and Italy hang in the balance, while China's growth pace appears to slow down have pressured commodities and equities ETFs in general in recent weeks.

In the past week, the United States Natural Gas Fund (NYSEArca: UNG) shed another 13.5 percent of value, earning the distinction of being the worst-performing fund in a one-week time frame. The fund has given up more than 37.4 percent since the beginning of the year.

The United States 12 Month Natural Gas Fund (NYSEArca: UNL) and the Teucrium Natural Gas Fund (NYSEArca: NAGS) weren't far behind, having lost 7.8 percent and 6.7 percent in the last week, respectively. Both UNL and NAGS have also faced losses of more than 20 percent year-to-date.

Sticking to the eurozone-in-trouble theme, funds that serve up exposure to Europe were also under pressure. The WisdomTree Euro Debt ETF (NYSEArca: EU) was one of the worst-performing funds in the past week, shedding nearly 10 percent of value.

The $4.2 million fund, primarily comprising midterm euro-denominated debt from countries such as Germany, France and Luxembourg, has only seen losses of 6.2 percent year-to-date, which suggests that if the current sell-off continues, the year-to-date loss figure could quickly start mounting.

The iShares MSCI Spain ETF (NYSEArca: EWP) was another bottom-performer, bleeding 8 percent in a week.

Top Performers

While its counterparts made the ranks in the worst performers' list, the Etracs Natural Gas Futures Contango ETN (NYSEArca: GASZ) was among the best-performing funds, tagging on 6.25 percent in gains last week to push its year-to-date performance up to 12 percent.

GASZ is designed to benefit from contango—a condition that usually erodes returns when investors have to pay up to roll from a cheaper expiring front-end contract to a costlier one farther into the futures curve. But GASZ shorts the front-end month, making weakness in the spot price of natural gas a friend to the fund's performance rather than foe.

Another top performer this week was the Guggenheim Airline ETF (NYSEArca: FAA), which gained 7.5 percent. The fund is probably benefiting from a boom in demand as the Northern Hemisphere kicks off its travel season at a time when oil prices are tanking. Year-to-date, NYMEX oil prices are down 12.5 percent—another victim of the mounting case against the prospects for aggregate demand.

Lower oil costs and booming demand for plane tickets should bode well for those airlines comprising FAA's portfolio.

 

Top 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded

Ticker Name Weekly Performance Weekly Volume AUM ($, mm)
GWO ELEMENTS Credit Suisse Global Warming ETN 8.70% 60,574 2.80
FAA Guggenheim Airline 7.55% 76,621 15.46
TSXV Global X S&P/TSX Venture 30 Canada 6.56% 18,006 2.35
GASZ ETRACS Natural Gas Futures Contango ETN 6.25% 24,190 12.20
CHII Global X China Industrials 5.32% 5,999 4.44
ZROZ PIMCO 25+ Year Zero Coupon U.S. Treasury 4.96% 290,970 175.48
EDV Vanguard Extended Duration Treasury 4.75% 189,643 229.01
AGLS AdvisorShares Accuvest Global Long Short 4.63% 52,200 15.20
CHXX EGShares China Infrastructure 4.46% 121,564 12.18
DBEF db-X MSCI EAFE Currency-Hedged Equity 4.45% 52,142 30.97

Bottom 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded

Ticker Name Weekly Performance Weekly Volume AUM ($, mm)
UNG United States Natural Gas -13.54% 50,581,205 902.65
EU WisdomTree Euro Debt -9.63% 11,331 4.19
IDXJ Market Vectors Indonesia Small Cap -8.54% 3,295 4.41
EWP iShares MSCI Spain -7.93% 3,658,600 130.63
UNL United States 12 Month Natural Gas -7.85% 203,704 36.04
EIDO iShares MSCI Indonesia Investable Market -7.29% 972,350 259.40
IDX Market Vectors Indonesia -7.26% 4,037,008 442.38
UBN ETRACS CMCI Energy Total Return ETN -6.73% 19,600 2.80
NAGS Teucrium Natural Gas Fund -6.69% 8,175 3.32
EMER IQ Emerging Markets Mid Cap -6.43% 2,100 1.51

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

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