Don Dion's Weekly ETF Blog Wrap

NEW YORK (TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next.

In the following three blogs from the past week Don advised investors not to give up on a certain natural gas ETF, said to go with gold ETFs that are physically backed by the precious metal and commented on investing in the Internet revolution.

I Won't Give Up on FCG

Posted 03/05/2010 7:48 a.m. EST

Both the United States Natural Gas ETF(UNG) and the First Trust ISE-Revere Natural Gas ETF(FCG) moved lower this afternoon as investors digested the government's latest natural gas supply data. As of 3:30pm, FCG had dropped 2.11%, while UNG had fallen more than 3.8%.

Supplies of natural gas may not be dropping as quickly as expected, but FCG's going to be a hard habit to break -- and I'm not sure I'm ready yet.

Since I first recommended FCG last June, I'm sure that more than one of you has gotten sick of hearing about this particular basket U.S. of companies involved in the exploration and production of natural gas.

I'll admit it: My initial passion for FCG was partially fueled by my dislike for UNG. I've certainly beat that ETF's problems to death, but, suffice to say, I was disillusioned even before UNG started selling futures contracts to buy stocks.

I like the feeling of knowing that FCG tracks real, live U.S. natural gas firms, not a basket of derivatives.

(Disclaimer: I have been recommending AMJ, which is debt instrument comprising master limited partnerships. I still think the advantages of this product for income far outweigh the risks of the ETN structure.)

Over the past eight months, however, I've come to appreciate the elegance of FCG's equal-weighted methodology. This fund provides exposure to 31 natural gas firms (using four different screens to eliminate the crazies) and never puts all your eggs in one basket.

Since I first recommended FCG as an alternative, I've spent a lot of your time bashing UNG. For every time I've stripped apart UNG's strategy, however, I've taken time to appreciate the potential of the real-life U.S. natural gas firms that FCG tracks. FCG has renewed my faith in the natural gas sector, in drilling technology, in shale...

It hasn't hurt that FCG's gone up 29% since Jun. 18, 2009 while UNG has fallen nearly 77%.

I still think the U.S. natural gas companies look strong. It's not time to give up on FCG yet.

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