UNG’s Woes Visualized

The United States Natural Gas Fund, LP (NYSEARCA:UNG) is by far the most popular ETF offering exposure to this fossil fuel. But the fund has come under heavy fire in recent years, as its failure to accurately track NG over the long term has been a point of contention for many. Since inception, the downward pressures on NG have made UNG one of the worst performing ETFs of all time, as the product was forced to endure multiple reverse splits just to stay open. At its worst, UNG was sitting down 98% since inception, though it has recovered slightly in recent months [for more natural gas news and analysis subscribe to our free newsletter].

In fact, United States Natural Gas Fund, LP (NYSEARCA:UNG) has never been able to finish out a calendar year in the black. The fund debuted in April of 2007, making its first full calendar year 2008. Though the NG giant had a positive seven or eight months to close out 2007, it have been all downhill since. To give investors a better idea of just how poorly UNG has performed, we offer a chart of its annual performance for the past four years.

So if the fund has performed so poorly over time, why does anyone keep investing? The answer is quite simple; United States Natural Gas Fund, LP (NYSEARCA:UNG) was designed as a trading product and not as one for investors to hold over the long term. The fund is among the most liquid and tradeable in the world, as it has more than $1.1 billion in total assets and trades more than 8.7 million shares on a daily basis. In reality, the fund should only be used by those who have the discipline and time to watch over its movements carefully [see also Citi’s Energy Outlook For 2013].