What Is KOLD? ProShares UltraShort Bloomberg Natural Gas

KOLD is the ProShares UltraShort Bloomberg Natural Gas ETF, a -2x inverse leveraged fund that seeks twice the opposite of the daily move in the Bloomberg Natural Gas Subindex, an index of natural gas futures. It is designed to rise when natural gas prices fall and to fall when they rise, by roughly double the daily percentage move. It uses futures and derivatives rather than holding physical natural gas, and it is built for short-term trading, not long-term holding.

KOLD has an expense ratio of about 0.95%, meaning roughly $9.50 a year in fees for every $1,000 invested. That is high compared with broad, low-cost index ETFs, and the cost is only one part of the picture: daily-reset leverage decay and futures roll costs can affect returns far more than the headline fee over any holding period longer than a day or two.

KOLD tracks the daily performance of the Bloomberg Natural Gas Subindex, an index based on natural gas futures contracts, and targets -2x (two times the inverse) of that index's move each day. It does not track the spot price of natural gas directly and does not hold physical gas. Because the exposure comes from futures, the shape of the futures curve and the daily reset both cause its longer-term returns to diverge from simply doubling the inverse of natural gas prices.

No. KOLD is explicitly designed for short-term trading, typically a single day or a few days. Three structural forces erode it over time: (1) the daily reset of its -2x leverage causes volatility decay, so choppy markets grind the value down even if natural gas ends roughly flat; (2) natural gas is one of the most volatile commodities, which amplifies that decay; and (3) the fund must continually roll futures contracts, and the futures curve (contango or backwardation) creates roll costs that add further drag and uncertainty. Over weeks or months KOLD can lose value even if natural gas eventually moves your way.

A -2x inverse commodity ETF like KOLD uses futures, swaps, and other derivatives, backed by cash collateral, to deliver twice the opposite of a commodity index's return for one day. If the index falls 1% today, the fund aims to gain about 2%; if it rises 1%, the fund aims to lose about 2%. Crucially, this objective is reset daily, so returns compound day by day. Over multiple days, the path of prices matters, not just the start and end points, and in volatile or trending markets this compounding plus futures roll costs can cause the fund to drift far from -2x the period move.

Walnut is informational, not investment advice. KOLD is not a traditional investment; it is a short-term trading tool for active traders with a specific, near-term view that natural gas prices will fall. It is generally unsuitable as a long-term holding because daily-reset leverage decay, the extreme volatility of natural gas, and futures roll costs can erode it over time even when the broad direction is right. Anyone considering it should understand all three risks, monitor the position closely, size it small, and recognize that they can lose money quickly. This is not a recommendation.

KOLD and BOIL are ProShares siblings that take opposite sides of natural gas. KOLD seeks -2x the daily move (it profits when natural gas falls), while BOIL seeks +2x the daily move (it profits when natural gas rises). Both reset daily, both use futures, and both suffer from compounding decay and roll costs. BOIL has historically lost the vast majority of its value over long periods, a cautionary example of how leveraged commodity ETFs erode. Neither is meant to be held long term, and being on the right directional side does not protect you from decay.

Because KOLD targets -2x for a single day and resets each day, its longer-term return depends on the path of prices, not just the net change. In volatile markets, the daily compounding (volatility decay or beta slippage) can drag the fund down even during a multi-week natural gas decline, especially with sharp swings in both directions. Add the ongoing cost of rolling futures contracts and the 0.95% expense ratio, and KOLD can underperform a simple -2x of the period move, sometimes losing value even when natural gas ends lower.

Put a few fields side by side: the expense ratio (fees compound over decades), the index or strategy it tracks, the top holdings and how much they overlap with what you already own, the dividend yield, and the AUM, liquidity, and bid-ask spread that affect trading costs. For index funds, tracking error (how closely it follows its index) and tax efficiency matter too. KOLD's figures are above; the full method is in Walnut's guide on how to compare ETFs.