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Auspice Capital launches first-ever Canadian Natural Gas Index ETF

Auspice Capital launches first-ever Canadian Natural Gas Index ETF

Photo by Bloomberg

27th October 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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VANCOUVER (miningweekly.com) – Calgary-based alternative investment manager Auspice Capital Advisors has launched the first-ever Canadian Natural Gas Index ETF (GAS), the company announced on Thursday.

Together with the Canadian Natural Gas Index (CGI), this exchange-traded fund (ETF) enables investors and market participants to actively monitor and speculate outright on the price of Canadian natural gas, Auspice founder and chief information officer Tim Pickering tells Mining Weekly Online.

“GAS seeks to replicate, to the extent possible, the performance of the Canadian Natural Gas Excess Return Index (CNGER) net of expenses, and allows investors to access the price of natural gas produced in Canada,” says Pickering.

Auspice highlighted GAS and the CGI as the only ETFs and retail benchmarks globally tied to natural gas produced in Canada. Until now, there had been no other ‘pure play’ for investors outside the wholesale marketplace to directly express a position on this commodity.

According to Pickering, the GAS ETF is designed to track the performance of the Canadian natural gas market in an investable format and seeks to reflect the returns that an investor would expect to receive from holding and rolling the contracts that comprise the benchmark index.

Critically, the GAS ETF enables investors to express views on the price of the Canadian natural gas commodity without the market risks of buying gas producer company stocks themselves, he notes.

IMPORTANT RESOURCE
Pickering advises that the investment can be used as a hedge against rising natural gas prices. It could even enable speculation on the price differential between Canadian Natural Gas and other global benchmarks.

“Canadian natural gas is critically important to the North American marketplace. Representing approximately 20% of the continent’s total production, Canada is the largest foreign supplier of natural gas to the US – the world’s largest market participant. As such, it is important for investors to be able to accurately track and capitalise on the commodity’s performance,” Pickering states.

The GAS ETF started trading on the Toronto Stock Exchange Thursday under the ticker symbol ‘GAS’. It tracks the performance of the CNGER, seeking to reflect the returns that an investor can expect to see when holding and rolling the contracts that constitute the CGI benchmark index.

The US, which is the largest consumer globally, accounts for about 20% of North America's total output, of which 80% is produced in Alberta.

“Natural gas is a valuable commodity used across residential, commercial and industrial settings. By allowing for a more accurate, transparent price tracking method, we hope to raise awareness of Canada’s dominance within the global natural gas marketplace and to allow for enhanced market transparency and participation in this important commodity,” Pickering notes.

The CGI reference price is displayed in US dollars and represents a three-month rolling exposure to take advantage of liquidity and reduce transaction costs. It is calculated and reported on the NYSE website under the ticker symbol ‘CDNGAS’.

Auspice’s Canadian Crude Oil Index ETF already capitalised on the current market’s performance by replicating the returns that an investor would expect to receive from holding and rolling the contracts encapsulated within the benchmark oil index.

Auspice’s products provide the only way to invest in these energy commodities outside of the wholesale marketplace.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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