U.S. Natural Gas Fund To Reverse Split

The infamous U.S. Natural Gas Fund

, which has plunged more than 38% in the past year as natural gas futures have continue their tailspin, will undergo a reverse 2-for-1 split on March 9. Reverse splits have become among ETFs trading in the single digits, though the practice has been seen most recently with inverse ETFs that have hammered as the market has surged higher. UNG is not inverse nor is it leveraged. UNG and similar ETFs such as the U.S. Oil Fund

have come under fire for their use of futures contracts to track commodities. This practice boosts expenses for investors and has led to situations where oil and natural gas may actually go up price, but USO and UNG decline. The investment objective of UNG is for the changes in percentage terms of the units' net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire, less UNG's expenses, according to US Commodity Funds LLC's Web site. Investors should note open orders in UNG will be canceled on March 8 prior to the reverse split.