Natural Gas ETF | ETFs Funds List

Natural gas is the best energy alternative to foreign oil. There are several crucial benefits to it that will change the face of the energy market in the years to come. One of the ways to get in on what many experts say is a coming gas boom is by investing in a natural gas ETF.

Below is a list of ETFs that invest in this sector. They are divided into two categories, equities funds which invest in stocks and commodities funds which invest in the futures market.

The benefit to ETFs or exchange traded funds is that you don't have to pick individual securities. By investing in ETFs you are letting a professional money manager pick what goes into the basket of securities. In addition, unlike a traditional mutual fund, there are usually no management fees and you can trade them like stocks on the financial exchanges.

The following is a list of current ETFs you can invest in. There are two kinds, the commodities funds and the equities funds. Commodities funds trade futures contracts as their investment approach. Equities funds invest in a basket of stocks that would benefit from the growth of the gas industry.

• United States Natural Gas Fund (UNG)
• ETFS Natural Gas (NGAS)
• iPath Dow Jones-UBS Natural Gas Subindex Total Return ETN (GAZ)

There is only one equities fund currently that is exclusively equities. There are other ETFs and funds that invest in natural gas related companies, but they pair it with oil. The following is the only exclusively gas ETF.

• First Trust ISE-Revere Natural Gas Index Fund (FCG) – Equities

The following are oil and natural gas ETFs that combine both industries. The reason it's hard to separate those two out is because many of the same companies do both oil and gas exploration and drilling.

• SPDR S&P Oil & Gas Equipment & Services ETF (XES)
• IShares Dow Jones US Oil & Gas Exploration ETF (IEO)
• PowerShares Dynamic Oil & Gas Services Portfolio (PXJ)
• ProShares UltraShort Oil & Gas (DUG
• ProShares Ultra Oil & Gas (DIG)

Benefits of Natural Gas

Probably the best benefit to natural gas is that it burns much cleaner than oil or coal. In fact, it burns around 30% cleaner than oil in vehicles and up to 40% cleaner for industrial use. The positive impact to our environment by transitioning our energy consumption to gas is enormous for the environment.

There has historically been a tension between environmentally-friendly solutions and business. They are used to being at odds with one another. Natural gas is one of those few ways to make money from an industry that will help the environment.

Alternative to Foreign Oil

Gas is the best alternative to using foreign oil. The United States currently has around 238 trillion cubic feet of gas reserves. There is probably another 1.8 quadrillion cubic feet of reserves that are unconfirmed but is likely to be there. That is enough to fuel our economy for another 100 years. That is plenty of time to figure out a cleaner and renewable energy solution.

There are increasing political and economic pressures for the US to get off of dependence on foreign oil. We are far from it right now, but that pressure will continue to build and the value of natural gas ETFs will only increase over time. The instability in the Middle East compounded by the coming clash of civilizations will eventually lead us to get off our oil dependence, and that will lead us to use more gas.

Solar and wind energy is considerably cleaner than natural gas. They emit virtually no emissions, except in the manufacturing of the equipment and transportation. But in of itself, it is completely clean and renewable. So why wouldn't it take the place of both oil and gas, both of which is finite and produces CO2 greenhouse gases?

The reason is simple. Solar and wind technology is still decades away from providing enough energy at a low enough cost to replace oil. Oil is cheap to produce and distribute. And there is already national infrastructure in place to refine and distribute it. The obvious easier and cheaper alternative is natural gas.

Part of asset allocation and diversification should take into consideration multiple investment strategies that have future sector growth potentials. By investing in a natural gas ETF, you can invest your money on this sector that has a good chance to take over the energy market in the US.