Natural gas speculation through UNG ?

I came across this article recently. And several other articles lead to the same conclusion. Bottom line is that United States Natural Gas Fund (UNG) is not the best instrument to bet on a rebound of natural gas prices. Best way is of course to play it by buying futures on natural gas. But I do not want to be exposed to any leverage in this trade.

Another way to play the increase in natural gas price is by buying First Trust ISE Revere Natural Gas Index Fund (ticker: FCG, listed on the NYSE). In this case you bet on a rebound of the price of the stocks of natural gas producers instead of betting on an increase of the commodity itself.


Here is what the website of this ETF says:

The ISE-Revere Natural Gas Index is an equal-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas.

The Index is constructed by establishing the total population of stocks listed in the U.S. of companies involved in the exploration and production of natural gas and then eliminates stocks whose natural gas proved reserves do not meet certain requirements.

Hence, as from next week, I will switch my holding in UNG for a holding in FCG.