Roundhill Investments Launches First LNG-Focused ETF as Europe Shifts Away From Russian Gas

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Roundhill Investments has introduced the Roundhill Alerian LNG ETF (LNGG), the first exchange-traded fund (ETF) to focus on liquefied natural gas (LNG). This launch comes amidst Europe’s increasing move away from reliance on Russian gas following geopolitical tensions, where Russia had supplied 45% of Europe’s gas imports in 2021. In response to reduced Russian gas exports, Europe has significantly increased LNG imports and is expanding its import capacity.

David Mazza, Chief Strategy Officer at Roundhill, believes this shift away from Russian gas will likely be long-lasting, prompting Europe to explore new energy sources. LNG is regarded as a more environmentally friendly alternative to coal and oil, releasing 40% less carbon dioxide when burned. LNG companies are often seen as offering lower volatility and higher yields compared to the broader energy sector, as they have less exposure to the volatile exploration and production segment.

Apart from Europe, Mazza points to China, Vietnam, and the Philippines as regions expected to increase their LNG usage. Unlike natural gas, which cannot be transported overseas in its gaseous form, LNG is converted into a liquid through a cooling process, allowing it to be transported by ship. As LNG usage grows, it has the potential to make natural gas prices more global, reducing regional disparities.

Mazza estimates that global spending on LNG projects will reach approximately $100 billion over the next five years, and Roundhill forecasts that LNG’s share of the natural gas market will rise from 13% in 2022 to 23% by 2050. The LNGG ETF tracks an index of companies involved in the liquefaction, shipping, and conversion of LNG, offering investors exposure to this growing sector. The fund consists of 28 holdings and has an expense ratio of 0.65%.


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