The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD +1.65%) is an exchange-traded fund (ETF) that seeks to provide daily investment results corresponding to twice the inverse (or -200%) of the daily performance of the Bloomberg Natural Gas Sub-Index. In essence, if the natural gas market goes up, the ETF’s price would go down, and vice versa, with a magnified effect due to the -2x leverage.
The ProShares UltraShort Bloomberg Natural Gas ETF is operated by ProShares, a leading provider of ETFs offering a wide range of products across different asset classes, sectors, and market segments. ProShares is known for numerous products, including its leveraged ETFs (seeking to amplify returns) and inverse ETFs (designed to provide opposite returns to the underlying index).
This guide will tell you everything you need to know about investing in the ProShares UltraShort Bloomberg Natural Gas ETF.
What is the ProShares UltraShort Bloomberg Natural Gas ETF?
The ProShares UltraShort Bloomberg Natural Gas ETF is an ETF that seeks to achieve daily investment results that correspond to twice the inverse (-2x) of the performance of the Bloomberg Natural Gas Subindex for a single day. It does this by primarily investing in natural gas futures contracts and potentially swaps. As an inverse ETF, this means that the ProShares UltraShort Bloomberg Natural Gas ETF aims to go up when the Bloomberg Natural Gas Subindex goes down, or go down when the index goes up. This ETF is also leveraged, meaning it amplifies the daily performance of the index by a factor of 2.
The Bloomberg Natural Gas Subindex tracks the price performance of natural gas futures contracts. The ProShares UltraShort Bloomberg Natural Gas ETF invests in natural gas futures contracts, which are agreements to buy or sell a specific quantity of natural gas at a predetermined price on a future date. In certain situations, such as market emergencies or disruptions, the ProShares UltraShort Bloomberg Natural Gas ETF may also invest in swaps, which are agreements between two parties to exchange cash flows based on the performance of an underlying asset, in this case, natural gas.
The ProShares UltraShort Bloomberg Natural Gas ETF’s investment objective is to achieve a daily return that corresponds to -2x the daily performance of the Bloomberg Natural Gas Subindex. So if the index goes up by 1%, The ETF should go down by 2% (excluding fees and expenses). Since ProShares UltraShort Bloomberg Natural Gas ETF is a leveraged and inverse ETF, it is not designed for long-term holding. Its returns are not guaranteed to track the benchmark over longer periods due to factors like daily compounding and potential rolldowns of futures contracts.
Exchange-Traded Fund (ETF)
How to buy ProShares UltraShort Bloomberg Natural Gas ETF
Buying shares of the ProShares UltraShort Bloomberg Natural Gas ETF is fast and easy. Here's what you need to do.
- Step 1: Open your brokerage app: Log into your brokerage account where you handle your investments.
- Step 2: Search for the ETF: Enter the ticker (CHAT) or ETF name into the search bar to bring up the ETF's trading page.
- Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Step 5: Submit your order: Confirm the details and submit your buy order.
- Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings of ProShares UltraShort Bloomberg Natural Gas ETF
The ProShares UltraShort Bloomberg Natural Gas ETF invests in natural gas futures contracts, just like its underlying index, the Bloomberg Natural Gas Subindex. The ETF seeks to achieve daily investment results that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg Natural Gas Subindex. The fund may also invest in swaps in certain circumstances.
In early 2025, the Bloomberg Natural Gas Subindex held 100% natural gas futures expiring in May 2025. Likewise, the ProShares UltraShort Bloomberg Natural Gas ETF invests primarily in natural gas futures contracts, which are agreements to buy or sell natural gas at a future date and price. The ETF had a -199.95% exposure weight to natural gas futures with an expiration date of July 2025. The ETF’s net assets total $524.5 million.
Should I invest in ProShares UltraShort Bloomberg Natural Gas ETF?
Investing in the ProShares UltraShort Bloomberg Natural Gas ETF will depend on your personal risk tolerance level and investment goals. There are numerous factors to consider. The ProShares UltraShort Bloomberg Natural Gas ETF is both leveraged and inverse because it seeks to achieve daily investment results that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg Natural Gas Subindex. This means it aims to provide the opposite (inverse) of the daily performance of natural gas futures contracts, amplified by a factor of two (leveraged).
Because ProShares UltraShort Bloomberg Natural Gas ETF aims to replicate the inverse performance of the Bloomberg Natural Gas Sub-Index, it will move in the opposite direction and at twice the magnitude of the index's daily fluctuations. As a leveraged ETF, it uses financial instruments (like futures contracts) to amplify its exposure to the natural gas market. This can result in potentially higher gains or losses compared to a non-leveraged ETF. This ETF is designed to be used as a tactical trading tool and is not intended to be held for extended periods. Its returns are designed to be based on a daily performance rather than a longer-term view.
The ETF's structure means that it is highly susceptible to market volatility and can experience significant price swings. The "UltraShort" designation indicates that the ETF's performance is designed to be the inverse of the natural gas market. This means it will benefit if the price of natural gas falls and be hurt if it rises. For investors focused more on short-term gains who are experienced in futures trading and have a strong risk appetite, the ProShares UltraShort Bloomberg Natural Gas ETF may be an ETF to consider. However, for long-term investors focused on a buy-and-hold strategy, this ETF is likely not a suitable choice.
Does ProShares UltraShort Bloomberg Natural Gas ETF pay a dividend?
ProShares UltraShort Bloomberg Natural Gas does not currently pay a dividend. It's designed to track the negative daily performance of the Bloomberg Natural Gas Subindex, not to distribute dividends.
What is ProShares UltraShort Bloomberg Natural Gas ETF’s expense ratio?
This ProShares ETF has an expense ratio of about 0.95%, on the higher end of expense ratios. A $10,000 investment in this ETF would incur an annual fee of approximately $95.
Expense Ratio
Historical performance of ProShares UltraShort Bloomberg Natural Gas ETF
The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) seeks to provide two times the negative (or inverse) of the daily performance of the natural gas index. This means that if the natural gas index decreases by 1%, its price is expected to increase by 2% (before fees and expenses). Let’s see how the fund has delivered on that objective through the years since its inception in 2011.
Fund | 1Y | 3Y | 5Y | 10Y | Since Inception |
|---|---|---|---|---|---|
KOLD Market Price | -75.02% | -15.36% | -49.90% | -23.68% | -15.09% |
KOLD NAV | -74.25% | -15.28% | -50.06% | -23.62% | -15.05% |
Related investing topics
The bottom line on ProShares UltraShort Bloomberg Natural Gas ETF
The ProShares UltraShort Bloomberg Natural Gas ETF seeks to deliver twice the inverse daily performance of the Bloomberg Natural Gas Subindex. The ETF's daily target is reset each day, meaning that returns may be affected by market fluctuations and should not be considered a long-term investment.
The ProShares UltraShort Bloomberg Natural Gas ETF primarily invests in natural gas futures contracts to achieve its investment objective. The leveraged nature of the ProShares UltraShort Bloomberg Natural Gas ETF means that it can potentially generate large returns in a short period if the price of natural gas futures contracts falls significantly.
Investing in leveraged and inverse ETFs involves high risk and should be considered only by investors with a high tolerance for volatility and potential losses. Due to the daily reset and potential for significant deviations from the target over time, ProShares UltraShort Bloomberg Natural Gas ETF is likely not ideal for investors with long-term, buy-and-hold strategies.
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