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US natural gas fund to begin trading on 18 November

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The United States 12 Month Natural Gas Fund, an exchange-traded security that is designed to track the movements of natural gas prices, will begin trading on 18 November.

UNL is a commodity pool organised as a Delaware limited partnership that issues units that may be purchased and sold on the NYSE Arca.

The investment objective of UNL is to have the changes, in percentage terms, of the units’ net asset value reflect the changes of the price of natural gas delivered at the Henry Hub, Louisiana.

This is measured by the changes in the average of the prices of 12 futures contracts on natural gas traded on the New York Mercantile Exchange consisting of the near month contact to expire and the contracts for the following 11 months, for a total of 12 consecutive months contracts, except when the near month contract is within two weeks of expiration. In this case it will be measured by the futures contract that is the next month contract to expire and the contracts for the following eleven consecutive months, less UNL’s expenses.

Natural gas futures are one of the most actively traded futures contracts and represent the primary US benchmark for natural gas.

The portfolio consists of listed natural gas futures contracts and other natural gas related futures, forwards and swap contracts. These investments will be collateralised by cash, cash equivalents and US government obligations with remaining maturities of two years or less.

When calculating the daily movement of the average price of the 12 contracts, each contract month will be equally weighted. It is not the intent of the fund to be operated in a fashion such that it’s NAV will equal, in dollar terms, the spot price of natural gas or any particular futures contract based on natural gas.

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