ProShares UltraShort Bloomberg Natural Gas Outlook
Description
The fund seeks to meet its investment objective by investing in Natural Gas futures contracts. It may also invest in swaps if the market for a specific futures contract experiences emergencies or disruptions (e.g., a trading halt or a flash crash) or in situations where the Sponsor deems it impractical or inadvisable to buy or sell futures contracts (such as during periods of market volatility or illiquidity).
ProShares UltraShort Bloomberg Natural Gas ETF is an inverse fund that provides exposure to declining natural gas prices. The bear case for natural gas includes factors such as economic downturns, renewable energy shift, and oversupply issues. The KOLD ETF carries potential rewards of profiting from falling natural gas prices, but also risks such as volatility decay and thus is not suitable for long-term holding.
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Chris DeMuth Jr. discusses his investment strategy for 2023 and the current state of the market. He expresses his preference for the energy sector, particularly oil and gas, due to mispriced equities and potential for cash returns.
The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) has returned 122% since October 31st due to seasonal weakness in natural gas. KOLD is only suitable for short-term trading as it suffers from extreme 'volatility decay' and has poor long-term returns. Although natural gas prices have plunged due to warm weather, rising geopolitical tensions could be a wildcard that supports prices in the near term.