Analyzing Natural Gas ETFs’ Performance



Natural gas ETFs

Between May 18 and May 25, the ETFs that track natural gas futures had the following performance results:

  • The United States Natural Gas ETF (UNG) rose 3.4%.
  • The ProShares Ultra Bloomberg Natural Gas ETF (BOIL) rose 6.8%.

Between May 18 and May 25, natural gas July futures rose 2.9%. In Part 1, we discussed the factors behind natural gas’s moves during this period. UNG holds active natural gas futures contracts. 

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Long-term ETFs’ returns

From March 3, 2016, to May 25, 2018, natural gas active futures rose 79.3% from their 17-year low. During this period, UNG rose 3.5%, and BOIL fell 31.9%.

Since March 3, 2016, UNG and BOIL’s returns were lower compared to huge gains in natural gas active futures. The negative roll-yield could 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 also be different because of the compounding effect of price changes on a daily basis.

On May 25, the closing prices of natural gas futures contracts for delivery between July and August settled in ascending order. The price pattern could hamper UNG and BOIL’s returns compared to natural gas’s returns.


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