This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

2 Natural Gas Funds to Watch

Stocks in this article: UNGFCGFSNGXCHKBPRDS.A

NEW YORK ( TheStreet) -- A number of companies both domestic and international are looking for ways to increase their exposure to the U.S. natural gas industry. Investors have a chance to get involved in this industry through a number of different avenues.

Picking which is best, however requires a careful eye.

An uptick in activity put the Texas Eagle Ford shale formation in the spotlight this week. Norwegian energy firm Statoil (STO) (STO) and Talisman Energy (TLM) announced a joint venture, while China's state-owned energy goliath CNOOC (CEO) said it would spend over $2 billion to acquire a portion of Chesapeake Energy's (CHK) stake in the region. CNOOC's deal marks that largest ever Chinese purchase of U.S. energy assets.

Two Funds Harness Natural Gas Potential

In the near term, winter is approaching quickly and natural gas prices could see an uptick as consumers crank up their thermostats to battle bitterly cold weather.

However, deals such as CNOOC's strengthen the industry's prospects for the longer term as well. As China and other emerging nations continue to develop at a rapid pace, it will become increasingly essential to look abroad for ways to quench their economies' near insatiable appetites for energy.

If CNOOC's foray into the U.S. shale industry is the start of a longer trend of foreign nations looking to North America as an important energy source, it could be a source for strength for natural gas producers.

Rather than using the troubled United States Natural Gas Fund (UNG) to satisfy their natural gas fix, investors can invest in the growing interest in this industry using one of two products: the First Trust ISE Revere Natural Gas Fund (FCG) or the Fidelity Select Natural Gas Fund (FSNGX).

Both FCG and FSNGX provide investors with exposure to a diverse basket of companies heavily involved in the production of natural gas. While their goals are similar, the two funds have differences which make them appealing to two separate audiences.

Most noticeably are the differences between the two indexes. While both FCG's and FSNGX's underlying holdings include household natural gas names such as Chesapeake, FCG appears to dedicate an interestingly large amount of its portfolio to integrated oil majors. Meanwhile, FSNGX can be considered more of a pure play in natural gas production.

This summer, I highlighted FCG's dedication to oil majors after noticing that ExxonMobil (XOM) accounted for a surprisingly large slice of the fund's index after purchasing XTO's natural gas business. The fund's index has since been rebalanced and Exxon's position has been decreased considerably. However, the fund continues to boast heavy exposure to diversified energy conglomerates.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,550.81 +151.14 0.92%
S&P 500 1,931.34 +27.33 1.44%
NASDAQ 4,389.5720 +73.4980 1.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs