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New Natural Gas ETF Is Risky

Top component FST Forest Oil has several years of promising onshore drilling prospects, with core holdings in emerging Texas and Canadian tight gas and gas shale properties. The company is currently planning on selling more than $1 billion in assets to reduce current debt and provide additional liquidity.

Natural gas firms are a promising long-term play in a sector where global demand continues to increase. Prospective WCAT investors, however, should give this new ETF some time to gain traction before scooping up shares.

WCAT faces two challenges when it comes to liquidity: the liquidity of its underlying stocks and the liquidity of the ETF as a whole during daily trading. Small-cap companies are less liquid than large-cap stocks, and most ETFs take some time to attract investor attention.

Small-cap ETFs like WCAT are welcome additions to the ETF industry, but they should be considered in conjunction with a broader portfolio.

-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion did not have any holdings in the equities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.
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