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October 6th, 2011 by

ProShares Unveils Pair Of 2x Gas ETFs

ProShares Unveils Pair Of 2x Gas ETFs.

Here is a write about ProShares Gas ETFs

 

 

ProShares Unveils Pair Of 2x Gas ETFs
By Olivier Ludwig | October 06, 2011

Related ETFs: GASX / GASL / GAZ / UNG / NAGS / DCNG

ProShares, the world’s biggest purveyor of leveraged and inverse exchange-traded funds, unveiled a bull-and-bear pair of double-exposure ETFs focused on natural gas futures, giving investors tools to play both sides of a market that’s rapidly developing as hydraulic-cracking extraction technology takes off.

The ProShares Ultra DJ-UBS Natural Gas (NYSEArca: BOIL) and the ProShares UltraShort DJ-UBS Natural Gas (NYSEArca: KOLD) both come with an annual expense ratio of 0.95 percent, the standard charge for all ProShares products. They will compete with a bull-and-bear pair of leveraged funds from Direxion.

The natural gas market is in full bloom, as “fracking” technology spreads around the country, unlocking vast reserves in shale-rock formations in places like North Dakota that were previously considered unexploitable. While environmental concerns surrounding fracking remain, it’s already clear that the U.S. natural gas supply/demand balance has been altered for good.

The ProShares products are thus squarely in the middle of this phenomenon, with investors able to play what fracking will do to gas prices. In the near term, the technology seems to be keeping a lid on price gains, but over the longer term, analysts widely expect fracking to enable natural gas consumption in the United States to spike significantly, likely putting upward pressure on prices.

The two ProShares products are based on the Dow-Jones-UBS Natural Gas Subindex, and provide double the daily exposure to that index.

Bethesda, Md.-based ProShares stressed that daily rebalancing of the funds on its website, saying the feature can mean that the performance of the funds can differ “in amount and possibly direction” from that of their index. It counseled investors to monitor such holdings frequently, perhaps even daily.

Competitors

The competing leveraged funds on the market—the Direxion Daily Natural Gas Related Bull 2x Shares (NYSEArca: GASL) and the Direxion Daily Natural Gas Related Bear 2x Shares (NYSEArca: GASX)—are based on ISE Revere Natural Gas Index.

Newton, Mass.-based Direxion recently said that its two gas funds—GASL and GASX—would become triple-exposure funds as of Dec. 1, in a move that the company said would bring it back in line to what it is known for in the world of ETFs, and would likely enhance its ability to gather assets.

The new ProShares products will also compete with two single-exposure, long-only iPath ETNs. Those are the iPath Dow Jones-UBS Natural Gas Subindex Total Return ETN (NYSEArca: GAZ) and the iPath Seasonal Natural Gas ETN (NYSEArca: DCNG), which is linked to the Barclays Capital Natural Gas Seasonal TR Index. iPath ETNs are backed by Barclays Bank Plc.

Also, United States Commodity Funds markets two single-exposure, long-only gas funds, the United States Natural Gas Fund (NYSEArca: UNG) and the United States 12 Month Natural Gas Fund (NYSEArca UNL). The company also recently put a double-exposure bearish natural gas fund into registration with the Securities and Exchange Commission.

Finally, in February, Teucrium Trading LLC rolled out the Teucrium Natural Gas Fund (NYSEArca: NAGS), which is designed to maximize returns by shifting its holdings to reflect the way the gas market operates.

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