With the first quarter of 2012 in the books and upon reviewing returns across the ETF landscape, the best performing fund in absolute terms thus far is ProShares UltraShort DJ-UBS Natural Gas (NYSEArca: KOLD), having rallied 101.89% year to date.
KOLD is a leveraged inverse product, delivering 2 times the inverse daily return of the Dow Jones-UBS Natural Gas Subindex (which tracks Henry Hub Natural Gas futures). It’s designed as a trading vehicle rather than a buy-and-hold investment.
It is no secret that natural gas prices have been in a downward spiral for the greater part of the past 3 years, and this product has rallied accordingly. [Natural Gas Premium: Don’t Get Stepped on by GAZ]
On the flipside, ProShares Ultra DJ-UBS Natural Gas (NYSEArca: BOIL) is structured as a “long” product and delivers 2 times the return of the same index as KOLD, and is down 80.31% year to date. Since these products are structured as “daily” bull and bear issues, constant monitoring and rebalancing is necessary in order to optimize usage and total returns.