As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.
Today, let's take a look at the United States Natural Gas ETF
Stats on U.S. Natural Gas ETF
|2012 YTD Return||(30.8%)|
|Assets Under Management||$995 million|
|Management Expense Ratio||0.60%|
|Current Price, August 2012 Natural Gas Futures Contract||$2.618|
|CAPS Rating (out of 5)||**|
Source: S&P Capital IQ.
Why is U.S. Natural Gas losing in 2012?
Given that the U.S. Natural Gas ETF tries to track natural gas prices, the big plunge in those prices in recent years has predictably caused big declines. Huge amounts of natural gas supply have come from advances in recovery technology, including hydraulic fracturing, that made exploiting shale gas areas far less expensive.
The resulting glut has pushed natural gas prices so low that even low-cost producer Southwestern Energy
One might wonder why, if spot gas prices are down roughly 13% since the beginning of the year, the U.S. Natural Gas ETF is down more than 30%. The trouble lies in the way the ETF rolls futures contracts forward. Because front-month contracts are generally cheaper than the next-month contract, the fund slowly loses value.
United States Natural Gas hasn't proven to be the ideal energy play. But don't worry; we've got another stock that we think has a better chance to deliver strong gains in the future. Read about it right here in the Motley Fool's special free report on the energy industry and its best prospects.
Click here to add U.S. Natural Gas ETF to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Fool owns shares of Ultra Petroleum and Chesapeake Energy. Motley Fool newsletter services have recommended buying shares of Ultra Petroleum and Chesapeake Energy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.