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Year to date, shares of the United States Natural Gas ETF have fallen more than 50%, while shares of First Trust ISE-Revere Natural Gas have jumped more than 58%. The important difference in performance between these two funds can be credited to structure and the ongoing drama unfolding in the futures markets.

The affect of futures markets regulation on funds like UNG has yet to be fully realized, but early indications show that there will be a profound impact on futures-based funds. As the Commodities Futures Trading Commission seeks to dampen the impact that exchange-traded products have on the commodities they track, a wave of mercy killings, restructurings and halts in share creation is likely to continue.

Drama isn't good in the world of passively indexed products. Most ETFs are launched with an objective and a means of execution. In the case of futures-based products like UNG, it is to track the price of oil synthetically through natural gas futures contracts. FCG, on the other hand, tracks natural gas companies through a basket of equities.

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Natural gas isn't the only place where this occurs. Investors looking to gain exposure to agriculture can choose PowerShares DB Agriculture or Market Vectors Agribusiness ETF. DBA tracks the futures contracts of commodities like corn, wheat sugar and soybeans. MOO, on the other hand, tracks agriculture companies like Syngenta and Monsanto. Year to date, MOO is up 45 per cent while DBA is down 0.34 per cent.

Historically, the argument made for futures-based commodity funds like UNG and MOO has been that baskets of futures are more of a "pure play" on commodity prices than baskets of equities. While the spot prices of commodities impact both futures markets and companies that deal with the commodities, the connection is stronger when you look at the futures markets.

Commodities-driven firms, like Monsanto, have fixed costs, so the price of a company's stock can vary significantly from the price of the raw materials that it uses. These unknowns have been enough, historically, for some ETF investors to choose futures-based funds to gain exposure to the commodities markets.

Now, however, the uncertainty surrounding futures-based ETFs has impacted the advantages of their structure. A halt in share creation over the summer sent UNG's premium skyrocketing more than 16 per cent -- a figure that has returned back to near-normal since the resumption of creation. On June 16, I recommended that investors stay away from UNG and instead consider FCG. This recommendation was in light of UNG's contango issues. Share creation in UNG was then halted on July 7, compounding UNG's problems. Since June 16, FCG has advanced 31 per cent, while UNG fell nearly 34 per cent.

PowerShares DB Commodity has faced its own challenges. Along with that of DBA, DBC's portfolio was recently restructured to stay within position limits proposed by the CFTC. While investors suspect that definitive regulation will arrive soon from the CFTC, ETF managers are keeping ahead of the curve by restructuring their portfolios to stay within limits.

All of this restructuring and creation-halting has had an impact on the performance of these futures-based products and the confidence of investors who utilize them to track commodities. There was no growth in UNG's assets last month, while FCG had a net cash flow of $162-million.

New ETF issuer Jefferies is also trying to capitalize on the uncertainty surrounding futures-based commodity funds. In late September, Jefferies launched the CRB Global Commodity Equity Index Fund , which tracks stocks instead of futures. Next up for Jefferies will be natural gas equity and wildcatter ETF options.

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The halt of share creation in iPath Dow Jones Platinum ETN last Friday may be the latest chapter in the futures-based fund saga, but it won't be the last. Exchange-traded products have offered investors unprecedented access to futures markets. Now we will see if this access can last.

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