Best Natural Gas Mutual Funds, Natural Gas ETFs, and Natural Gas Stocks for Growth and IncomeSam Subramanian PhD, MBARead this article to learn how you can maximize return from the best natural gas mutual funds, best natural gas ETFs, and best natural gas stocks.
Excess natural gas production from shale formations resulted in a supply glut in 2010 and pressured natural gas prices.
Planned cuts in natural gas production at the beginning of this year crimped supply. Rising industrial demand, a colder-than-normal winter, and an extremely hot July have since then contributed to an increase in demand. The shrinking gap between natural gas demand and supply has helped to work off excess inventories. Natural gas inventory levels have declined over 4% from the year-ago level; they are now 2% below their 5-year average.
Inventories are likely to tighten further if power producers continue shifting from coal and fuel oil to cleaner burning natural gas. Natural gas prices can increase as inventories tighten.Natural gas futures traders support this bullishness. NYMEX natural gas futures rise from $3.93 per MMBTU for October 2011 delivery to $4.25 for December 2011 delivery. The price for December 2012 delivery rises 26% to $4.95. The price curve rises through 2014 in a virtual straight-line tagging another 12%. The contract for December 2014 delivery changes hands at $5.56.
Rising natural gas demand and prices translates into opportunity for companies in different segments of the gas value chain. They include natural gas producers, service firms and natural gas distributors. This in turn opens up investment opportunities for mutual fund, ETF, and stock investors looking for growth as well as income.Best Natural Gas Mutual Funds for GrowthFidelity offers a wide range of actively managed sector mutual funds under the Fidelity Select funds family. Fidelity Select Natural Gas (FSNGX) is a pure-play no-load natural gas mutual fund. See: How to choose the best Fidelity Select fundBest Natural Gas Mutual Funds for IncomeFBR Gas Utility Index (GASFX) appeals to investors seeking income from investments in natural gas transportation and distribution companies. This natural gas mutual fund invests in utilities, master limited partnerships, and other companies included in the American Gas Association Stock Index.Best Natural Gas ETFs for GrowthFirst Trust ISE-Revere Natural Gas Index ETF (FCG) is a pure-play natural gas ETF investing in natural gas exploration, production, and service companies. See: Invest in the Best Sector ETFs ConsistentlyBest Natural Gas ETFs for IncomeJP Morgan Alerian MLP Index ETN (AMJ) and Alerian MLP ETF (AMLP) invest in U. S. energy infrastructure master limited partnerships. While the ETN tends to be more volatile and can offer higher return potential in bull markets, investors seeking tax-deferred distributions usually prefer the ETF structure.Best Natural Gas Stocks for GrowthDevon Energy (DVN) has successfully transformed itself as a high-growth onshore company and emerged as the largest natural gas producer in the Barnett shale. Devon's dominant position in the Barnett shale is complemented with liquids rich-assets in the Permian Basin. Devon has a well-defined program for increasing production and strong cash flow from current operations should help fund growth prospects. Devon Energy
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