A new exchange-traded fund (ETF) product has emerged from Roundhill’s pipeline for a more holistic exposure to the liquid natural gas (LNG) ecosystem.
On Friday, September 22, the investment company floated The Roundhill Alerian LNG ETF (LNGG) floated on the New York Stock Exchange Arca. This fund is no spot price tracker, though. With LNGG, buyers get exposure to firms positioned up and down the LNG pipeline, including those in liquefaction, regasification, and LNG carriers, and diversified companies in more than one of the three segments.
While it covers North America, LNGG is unique for its global focus – Roundhill claims it to be the first ETF providing focused exposure to the global LNG market.
LNGG’s underlying index comprises 28 companies, roughly 40% of which are American firms. LNGG’s lead holding is Houston-based Cheniere Energy, with a heavy weighting of 16.12%. The fund also includes significant exposure to Australian LNG giants Woodside and Santos (with 14.25% and 13.53% allocation, respectively), as well as Chinese ENN Energy, Japan’s Tokyo Electric Power Company, and Qatari Qatar Gas Transport Company at 4.19%.
The investment firm holds a bullish outlook on gas.
“LNG represents a transformative frontier in the energy sector,” said Dave Mazza, Roundhills’ Chief Strategy Officer. “Its growth trajectory is evident from its rapidly expanding share within the global gas supply.”
Tap that Gas
Indeed, between 2011 and 2021, natural gas was the fastest-growing fossil fuel. Over these ten years, consumption grew on average by 2.2% per year, compared to 0.1% and 0.7% for crude oil and coal, respectively.
Russia’s recent invasion of Ukraine threw liquid natural gas into the epicenter of a global energy crisis. Spot prices for the commodity soared to historic highs as demand skyrocketed as Europe raced to replace its dependence on Russian gas.
The war has redrawn the LNG map as importing countries struggle to secure supply and exporters pivot to new markets. According to Shell’s LNG outlook for 2023, the global LNG market will remain tight through the mid-2020s as Europe and Asia compete for limited new LNG supply. For now, Europe has seized much of the worldwide supply following the war, while many countries in developing Asia, after battling widespread blackouts, have fallen back on cheaper coal instead, a trend some industry leaders have called a clear result of “inequality.”
The ongoing green energy transition and heightened geopolitical risk will play an outsized role in shaping market forces for the commodity in the years ahead.
Despite its agrarian-sounding name, Roundhill is known for managing creative thematic funds centered on innovative technologies. For example, The Roundhill Cannabis ETF (“WEED”) allows investors a taste of the marijuana industry, while The Roundhill Video Games ETF (“NERD”) gives them a go at the video game industry.
Most of its other funds charge investors management fees ranging between 0.29% and 0.8%.
The LNGG has an expense ratio of 0.65%.