Fidelity Select Natural Gas Fund (FSNGX)
from Sound Advice
Updated from Investment Digest 755, March 19, 2014
Fidelity Select Natural Gas Fund (FSNGX) is essentially unchanged this year.
The precipitous drop in the price of oil brought the energy-equivalent costs of oil and natural gas closer, but a substantial disparity still exists. One barrel of oil provides approximately 5.8 million British Thermal Units (BTUs) of energy. At $50 a barrel, that is the cost of 5.8 million BTUs. However, with a market price for natural gas close to $3.00 for one million BTUs, 5.8 million BTUs will cost $17.40 (5.8x$3.00). So the same amount of energy is still available for 35 cents on the dollar, if it is in the form of natural gas rather than oil.
Most of the time, the costs of the two forms of energy have been closely aligned. They have moved closer together recently, but remain substantially apart. This difference still translates into an expanding natural gas industry, which makes this fund continue to be attractive. Natural gas is also cleaner-burning and more environmentally-friendly. These are both positive long-term fundamental forces acting on the natural gas market. Buy.
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825-7007, February 27, 2015