With the price of natural gas looking like it’ll only go up for the rest of the year, I’m trying to decide on the best way to play it. I’ve noticed that natural gas futures contracts ETFs like UNG and UNL have had a significantly greater return YTD compared to an equity ETF like FCG (138% for UNG, 134% for UNL, but only 71% for FCG). What are the pros and cons of investing in futures contracts vs. actual companies?
I’m also looking at individual stocks such as LNG and KMI as they seem like good plays given the current environment, however I’m wondering if I’d just be losing out on greater returns by not investing in UNG instead until inflation starts to cool down. My gut feeling is that having stocks in actual companies would be a better long term hold as I’m worried about geopolitical risks causing a sudden crash in the price of futures contracts. I’m trying to do my own DD but I’d like to hear other opinions on this too.
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