Home etftrends.com Look to Midstream ETFs for Another Way to Play Natural Gas

Look to Midstream ETFs for Another Way to Play Natural Gas

Investor interest in natural gas jumped in February, with natural gas ETFs being the second most-researched theme on ETF Database during the month.

Notably, in the past year, investor research has shifted from crude oil ETFs to its current focus on natural gas ETFs. The midstream segment of energy offers exposure to both natural gas and crude oil while being less sensitive to volatile commodity prices, though gas processing contracts can sometimes have exposure to the commodity price.

A significant portion of the midstream space is predominantly focused on activities related to natural gas, whether it be transporting through pipelines, gathering and processing, or liquefaction, according to Stacey Morris, head of energy research at VettaFi.

Companies that primarily make money from these businesses represent 59.5% of the Alerian MLP Infrastructure Index (AMZI) and 69.3% of the Alerian Midstream Energy Select Index (AMEI) by weighting as of March 9 .

The Alerian MLP ETF (AMLP) and the ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB) provide exposure to AMZI.

AMEI is the underlying index of the Alerian Energy Infrastructure ETF (ENFR) and the ALPS Alerian Energy Infrastructure Portfolio (ALEFX), a variable investment trust.

Notably, the growth opportunities for midstream today are largely centered around natural gas and LNG as opposed to oil due to steady production growth, growing exports through pipelines and LNG facilities, and solid domestic demand, according to Morris.

For more news, information, and analysis, visit the Energy Infrastructure Channel.

vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for AMLP, ENFR, MLPB, and ALEFX for which it receives an index licensing fee. However, AMLP, ENFR, MLPB, and ALEFX are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of AMLP, ENFR, MLPB, and ALEFX.

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