However, there is a school of thought that feels that natural gas exchange trading funds and natural gas mutual funds will go up, and that they are a worthwhile investment for the future even though they are not seen to be so now. The simple reason behind this trade of thought is that western countries such as the United States, as well as European countries, cannot continue to rely so heavily on foreign oil as they did before and even are now. Those who feel that the natural gas ETF and natural gas mutual funds will boom in a big way simply see no other alternative to what they feel is the inevitable end of easy and cheap access to large amounts of foreign oil.
Natural gas exchange traded funds (natural gas ETF for short) and natural gas mutual funds did not do so well in the year 2009. In fact, during last year they did a nosedive to where they are now worth less than a quarter of what they were when at their height. The main reason for this is that there is an overproduction of natural gas at a time when there already was an oversupply of it in the first place. The way that the United States natural gas fund ETF (UNG) has gone down has not only burnt those who invested a large amount of money into it, thinking that it would recover similar to how oil prices have, but has prompted the UNG to take some pretty desperate steps and measures to simply survive. In any case, at the present it does not seem to be the best of options as far as investment go.
Of course, this opens up a whole discussion on what the future of energy will be – will it continue to be oil for an indefinite period of time? Many people do not think so. But then again, besides natural gas, there are solar power, wind power and other alternative energy sources.
All that to say, while natural gas ETF and natural gas mutual funds have done very badly over the last year, burning many investors who thought they would do a lot better, they may still have a future. Like with any investments, however, one would do well to study up on the different options and how much of a risk they are. Another good idea is to see what the insiders in the industry are doing – are they bullish about natural gas ETF and mutual funds? If not, then perhaps you may want to think twice before you are.
