What does Natural Gas ETF mean?
Natural Gas ETF tracks the price changes of natural gas. Natural gas ETFs are divided in two categories: futures and equity-based ETFs. Future-Based Natural Gas ETF tracks the changes in the price of natural gas futures contracts. Equity-Based Natural Gas ETF tracks natural gas equities in the basket form of companies basically engaged in the exploration and production of natural gas.
Futures Knowledge Explains Natural Gas ETF
Natural gas ETFs are very useful instrument to hedge gas price for gas producers and consumers. There are some tracing errors over shorter time frames, but are closer to spot price of natural gas over medium, longer time horizons. The examples of Natural Gas ETFs traded at NYMEX are United States Natural Gas Fund (UNG) and First Trust ISE-Revere Natural Gas Index Fund (FCG).