Is Now the Right Time to Invest in a Natural Gas ETF?

Key Points

• Natural gas has benefited from surging demand and other factors, and it could continue to outperform into 2026.
• Investors cannot typically deal in spot natural gas, but ETFs provide a way to attempt to track the spot price through futures contracts.
• BOIL and KOLD are high-risk, high-reward leveraged plays, while UNG and UNL adopt slightly different methodologies in terms of the futures contracts they target.

Faster-than-average global energy demand growth in 2024 has helped to contribute to rising interest in nuclear energy, renewables, and natural gas so far in 2025. The U.S. Energy Information Administration (EIA) expects these trends to continue and has singled out natural gas as a particular energy source to watch. The EIA predicts the Henry Hub natural gas price will rise throughout 2025 and 2026 as demand from U.S. liquefied natural gas (LNG) export facilities surges. As demand exceeds supply, investors should watch for the price of natural gas to rise—the EIA predicts the spot price could reach as high as $4.00 per million British thermal units (MMBtu).

Investors bullish on natural gas in the coming months and quarters have a few ways to gain exposure to this resource. First, investors can target the energy source as directly as possible by investing in future contracts. Second, they can explore shares of companies dealing in the natural gas business. Third, and most commonly, they can invest in exchange-traded funds (ETFs) and related products that provide access to natural gas futures or baskets of related stocks accordingly.

With natural gas on the rise, it may indeed be time for investors to consider a natural gas ETF. Here are three popular choices with different focuses and risk profiles.

Maximizing Gains and Managing Risks With ProShares Bloomberg Natural Gas ETFs

One of the most powerful access points to natural gas is also among the riskiest. The ProShares Ultra Bloomberg Natural Gas ETF NYSEARCA: BOIL provides daily leverage at the rate of 2x on an index made up of natural gas futures. Although it does not perfectly mimic the spot price of natural gas, given the logistical impossibility of investing in spot natural gas for most investors, BOIL is a decent stand-in.

Because leverage resets daily, BOIL is effective when traded actively. What's more, the erratic short-term price movement of natural gas does mean that there is the potential for significant gains on a brief play on BOIL, but investors are also exposed to the risk of substantial losses as well.

This fund, with an expense ratio of 0.95%, may be contrasted by an investment in the ProShares UltraShort Bloomberg Natural Gas ETF NYSEARCA: KOLD, which functions in much the same way as BOIL except it offers inverse leveraged exposure, making this other fund a great way for bearish investors to benefit through short-term investments.

Comparing UNG vs. UNL: Key Differences Between Two Popular Natural Gas ETFs for 2025

USCF Investments offers two exchange-traded products focused on natural gas that may be worth considering: the United States Natural Gas Fund NYSEARCA: UNG and the United States 12 Month Natural Gas Fund NYSEARCA: UNL. UNG and UNL are, in many ways, quite similar—they are both structured as commodity pools, both use futures contracts to track the daily spot price movements of natural gas, and both have relatively high fees compared with most other ETFs on the market today.

So, how does an investor choose between these funds? UNG is the least expensive of the two vehicles, with an annual fee of 1.01% compared to UNL's 1.71%. It is also significantly more popular among investors, with a total asset base of more than $407 million as of March 27, 2025, while UNL had under $16 million in managed assets on the same day. UNG also has a one-month average trading volume more than 60 times that of UNL, indicating that liquidity is much less likely to be a concern.

But the biggest difference between these two options is that UNG targets the natural gas futures contract as traded on the NYMEX, which is the near-month contract to expire, while UNL focuses on the same and contracts for the subsequent 11 months as well. UNG thus appeals to more active traders and may see more significant price swings than UNL, which has a more diversified basket of futures.

For investors comparing performance, each of these funds has significantly outperformed the S&P 500 so far in 2025. UNG has returned 21.4% year-to-date as of March 27, while UNL climbed by 21.2%. UNG wins overall on a one-year return, though, 42.2% to 29.6%. Each investor should consider how actively they plan to trade and what the difference in diversification may bring to their portfolio before investing in either UNG or UNL.