The U.S. Natural Gas Fund,UNG,the largest exchange traded fund in the fuel, has found it more difficult than expected to create units using a new process that has purchasers trade natural gas swaps for shares. The Alameda, California based fund has gotten inquiries from market makers and hedge funds, said Jim Stegall, manager of institutional sales for the fund. Many investors prefer swaps of a few weeks or less, while the fund wants six month swaps.
“The vast majority hear that and they don’t want anything to do with that,” Stegall said. The complex swaps for shares creation process may take several weeks, he said.
The $3.9 billion fund grew 11 fold since the start of the year to 347.4 million shares outstanding before it ran out in July. The fund backs its shares with natural gas contracts.....read the entire article
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