Tag Archives: seeking-alpha

UNG Remains Range-Bound

Summary The injection to storage was 69 Bcf – close to market expectations. The price of UNG bounced back. The demand for natural gas in the power sector could climb back up on account of warmer weather. The oil and natural gas market remained range-bound in recent weeks. The price of United States Natural Gas (NYSEARCA: UNG ) bounced back last week, even though the injection to storage was close to market expectations and the weather — while it keeps heating up in many parts in the U.S. — hasn’t driven up the demand for natural gas in the power sector. Moreover, the price of UNG remained range-bound for recent weeks. Will the warmer weather start to heart up the natural gas market? According to the latest EIA report , the injection to storage was 69 Bcf, which wasn’t far off market estimates. Over the next few weeks the market estimates the injections to storage will be higher than normal — on average over 85 Bcf per week, while the five-year average is around 65 Bcf. The higher injection could be driven by higher production and even more so by softer demand. But is the demand expected to cool down? As of last week, the natural gas market has cooled down. The demand for natural gas changed course and slipped by 3.2% week over week. Most of this fall came from softer demand in the power sector. Even though other sectors — including industrial and residential/commercial — also saw a decline in consumption. As of last week, total consumption is up by 4.6% year on year. That’s not far off of the current annual outlook growth in consumption. Despite the drop in demand for natural gas in the power sector, in the coming weeks the weather is projected to be much warmer than normal — mainly in the West and parts of the South Atlantic. Also, the cooling degree days (CDD) are estimated to be higher than normal by 9 degrees, and by 8 degrees compared to last year. The higher temperatures and CDD could suggest a rise in consumption in the power sector. How Will the Price of UNG React to the Storage Report? During the winter time, the price of natural gas tends to react to the news about the changes in storage. But during the summer the correlation tends to be weaker and has a smaller impact on the price of UNG. So far this injection season the price of natural gas seems partly correlated to the deviation from market expectations. (click to enlarge) Source: Data taken from the EIA. The natural gas output inched down by 0.2% last week, but it’s still up for the year by nearly 5%. Baker Hughes reported a decline of nine gas rigs to 219. Conversely, oil rigs have gone up by 12 during the previous week. But oil rigs are also down for the year. Finally, the movement in the oil market, which shouldn’t have an impact on natural gas prices, still seems to coincide to a certain extent, as presented in the chart below. The correlation between the two data sets is 0.24. (click to enlarge) Source: Data taken from the EIA. In both cases, energy prices have been range-bound as the market continues to figure out what’s next for the energy market, and if and when we will see a drop in the production of U.S. oil companies. So far, oil and gas companies have reduced the number operating rigs and slashed capex for 2015. But these measures have yet to cool down the U.S. oil and gas yield. The injection season still has a few more months to go, in which the injections to storage are still expected to be higher than normal. Nonetheless, the hotter-than-normal weather in the coming weeks could start again driving up the demand for natural gas in the power sector, which could bring the price of UNG back up. Or, at the very least, it could keep prices range-bound. (For more, please see ” Natural Gas Is Still Floating … Barely .”) Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Hull Launches Its First ETF Product For U.S. Market

Hull Tactical Asset Allocation, in partnership with Exchange Traded Concepts, a white label exchange traded fund (ETF) service provider, has recently launched a new fund that employs a long-short strategy with the potential to profit from both rising and falling market conditions. The fund trades under the name Hull Tactical U.S. ETF (NYSEARCA: HTUS ). Below, we have highlighted some of the details about this newly launched product for investors keen to include this type of fund as part of their portfolio. Hull Tactical U.S. ETF The newly launched actively managed ETF seeks long-term capital appreciation by investing in U.S. equities and Treasuries markets. The fund uses proprietary, patent-pending, quantitative trading model, to take long and short positions in ETFs, leveraged ETFs or other securities that seek to track the performance of the S&P 500. The model is designed to forecast the returns of the S&P 500 for the next six months. Also, the fund is constructed to perform under all market conditions. The ETF currently holds 69.7% in the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ). However, the active strategy renders the fund pretty expensive with 99 basis points as annual fees How Does it Fit in the Portfolio? The fund is a good option for investors seeking to stay invested in the market under all conditions. “A wide range of investors – from sophisticated retail investors, to independent advisors to endowments and pension funds in the institutional space – should find our product advantageous,” says Steve McCarten, Chief Operating Officer of Hull Tactical Asset Allocation. Given the current equity market condition, investors can expect to reduce volatility exposure to the equity market through this fund. This is especially true as the long-short positions taken by the fund help to withstand volatility. Moreover, the fund is expected to provide higher diversification benefits as the long strategy is believed to be highly uncorrelated to the traditional asset classes. “Investing in the S&P 500 can be an uncertain game, but a disciplined and systematic approach can help you to outperform on a risk-adjusted basis,” says Blair Hull, Founder of Hull Tactical Asset Allocation. Competition Though the long-short space is not much crowded, it is gaining popularity every passing day and seeing a buildup in assets. The ProShares RAFI Long/Short ETF (NYSEARCA: RALS ) is expected to be the biggest competitor for the newly launched fund in the long-short space. This passively managed fund has an asset base of $46.7 million and charges 95 basis points as expenses. Apart from this, the First Trust Long/Short Equity ETF (NYSEARCA: FTLS ) is also likely to pose some competition for the fund. The actively managed product manages a relatively small asset base of $16.1 million and charges 95 basis points. Thus, it needs to be seen whether the newly launched ETF, which is slightly expensive to both the existing products, is successful in garnering a sizable asset base. Given its high expense ratio in the space, the success is expected to be a huge factor of the net returns the fund manages to deliver. Link to the original post on Zacks.com

Neuberger Berman Adds Long/Short Credit To Its Liquid Alts Lineup

By DailyAlts Staff A quarter-century ago, standard savings accounts paid enough interest to encourage people to keep their money in the bank. Times have obviously changed, and nothing could drive this point home harder than the fact some European countries saw benchmark interest rates fall below zero – into negative territory – earlier this year. In such a low-rate environment, traditional long-only bond investing isn’t much more attractive than holding cash in a low-yield savings account, especially since cash is safer than bonds – or at least it should be. Clearly, income-oriented investors need new strategies for generating current income and preserving capital, and that’s precisely what the Neuberger Berman Long/Short Credit Fund (MUTF: NLNAX ) aims to provide. Investment Approach The Neuberger Berman Long/Short Credit Fund, which was launched on June 29, pursues a fundamentally driven credit strategy involving both long and short positions. Its objective is to generate current income while managing volatility and preserving capital. Investments for the fund are selected using a multi-disciplinary approach with bottom-up company analysis, while taking the macroeconomic environment into consideration, as well. The fund’s overall strategy can be broken down into three sub-strategies: Core credit , which focuses on taking long positions in short-duration credit instruments; Alpha-seeking long/short , which involves taking directional positions in securities based on relative value and capital-structure arbitrage; and Opportunistic , which involves active and frequent trading in securities selected by the fund’s portfolio managers as attractive trading opportunities. Management The fund is managed by Rick Dowdle and Norman Milner, both of whom are Managing Directors of Neuberger Berman Management and Neuberger Berman Fixed Income, the fund’s advisor and sub-advisor. Mr. Dowdle began his career at Solomon Brothers and has 21 years of experience in the industry. Metals and mining companies, industrials, financials, and paper and forest products are his specialties. Mr. Milner is also a 21-year industry veteran. He began his career in South Africa, and his principal expertise is in emerging markets and sovereign credits. Share Information Shares of the Neuberger Berman Long/Short Credit Fund are available in A (NLNAX), C (MUTF: NLNCX ), and institutional (MUTF: NLNIX ) classes, with respective net-expense ratios of 1.57%, 2.32%, and 1.20%. Class A and C shares have an investment management fee of 1.07% a $1,000 minimum initial investment, while institutional-class shares have an investment management fee of 0.95% and a $1 million initial minimum. For more information, download a pdf copy of the fund’s prospectus .