Michael Johnston submits:
The United States Natural Gas Fund (UNG) is truly one-of-a-kind, not only as a commodity ETP but as an investment vehicle in general. Since its inception in April 2007, UNG has lost almost 90% of its value, steadily declining as natural gas prices tumbled and the nuances of a futures-based investment strategy ate into the asset base. That sort of track record would have killed a mutual fund long ago, and seemingly should have made investors think twice about natural gas as an investable asset. Yet UNG remains tremendously popular; total assets now stand at around .5 billion, and the average daily trading volume tops 20 million shares.
Even by UNG’s standards, August was an abysmal month. The fund lost about 23% of its value, or nearly 1% for every trading day during the month. For a commodity that is widely used in both industrial and residential applications–and one that seems likely to be a major component of the energy puzzle in the U.S.–such a steep drop in a relatively short period of time is difficult to fathom.