Natural Gas ETFs’ Performances Last Week



Natural gas ETFs

On March 29–April 6, 2018, the ETFs that follow natural gas futures had the following performances.

  • The United States Natural Gas ETF (UNG) fell 1.4%.
  • The ProShares Ultra Bloomberg Natural Gas ETF (BOIL) fell 2.9%.

On March 29–April 6, 2018, natural gas May futures fell 1.2%. In Part 1, we discussed the factors behind natural gas’s fall. UNG holds active natural gas futures contracts. BOIL tracks twice the daily changes of the Bloomberg Natural Gas Subindex on a daily basis.

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Long-term ETFs’ returns

From March 3, 2016, to April 6, 2018, natural gas active futures rose 64.8% from their 17-year low. During this period, oil-tracking ETFs UNG and BOIL fell 4% and 39.5%, respectively.

UNG and BOIL’s returns were in the negative zone compared to the upside in natural gas active futures since March 3, 2016. The negative “roll-yield” might be behind the lower returns. A negative roll-yield is caused when expiring futures contracts’ prices are lower than the following month’s futures contracts’ prices. BOIL’s actual and expected returns could be mismatched because of the compounding effect of price changes on a daily basis.

On April 6, 2018, the closing prices of natural gas futures contracts for delivery between May and August 2018 settled progressively higher. The price pattern might hamper UNG and BOIL’s upside compared to natural gas prices.


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