WisdomTree has introduced an innovative new exchange-traded commodity in Europe, the first globally to provide targeted exposure to European natural gas prices.
The ETC is the first globally to provide targeted exposure to European natural gas prices.
The WisdomTree European Natural Gas ETC has been listed on the London Stock Exchange where it trades in euros (Ticker: TTFW LN) and pound sterling (EGAS LN) as well as on Borsa Italiana (TTFW IM) and Xetra (EGAS GY), both in euros.
It comes with a management expense ratio (MER) of 0.49%.
The ETC is tied to the BNP Paribas Rolling Futures W0 TZ Index, which tracks the performance of second front-month natural gas futures contracts traded on the Dutch Title Transfer Facility (TTF), the most liquid natural gas hub in Europe. The index follows a predetermined monthly rolling schedule.
The index measures total return by factoring in three components: the futures price performance, the roll return (the gain or loss from rolling contracts), and the return on the cash collateral used to back the positions.
Nitesh Shah, Head of Commodities & Macroeconomic Research at WisdomTree, noted that the ETC’s launch comes at a pivotal moment for European natural gas markets as the Russia-Ukraine conflict has fundamentally altered Europe’s energy landscape.
Shah said: “Pipeline flows of natural gas from Russia to Western Europe, which used to be the main source of natural gas for the region, are now negligible. Western Europe is far more reliant on Norwegian pipeline flows and global liquified natural gas (LNG) imports.”
Despite Europe’s shift towards renewable energy, Shah noted the continued importance of natural gas: “As the European Union navigates an energy transition, it will still be reliant on natural gas. With that in mind, there will be periodic sharp increases in European natural gas prices as the fuel is used to make up shortfalls in renewables.”
“The Dutch TTF is the most representative and liquid natural gas benchmark in Europe and thus the best tool for tactical exposure to these price jumps and for hedging purposes.”
TTFW complements WisdomTree’s existing natural gas ETP range, which includes exposure to US Henry Hub natural gas through the WisdomTree Natural Gas ETP (NGAS LN), as well as short and leveraged exposure options. Collectively, these products provide investors with a robust toolkit with which to express both short-term tactical and long-term strategic views on the natural gas market.
Alexis Marinof, Head of Europe at WisdomTree, added: “We have a rich heritage of innovation and launching ‘first to market’ exposures across asset classes. Investors expect WisdomTree to deliver the exposures they are unable to find elsewhere, and that’s exactly what we have done with this ETC. This launch strengthens our market-leading position in commodity ETPs and gives investors an extra tool at their disposal to navigate a dynamic market environment.”