Picking the right natural gas ETF matters more than most investors realize. In a market where the same underlying commodity can perform very differently depending on whether you hold a futures-based fund, a leveraged fund, or an equity-based fund, getting the vehicle right is almost as important as getting the direction right.
This guide ranks and explains the main natural gas ETF options available to US investors, with an honest assessment of what each actually does, who it’s appropriate for, and the structural trade-offs you need to understand before putting money in. I’ve watched traders blow up holding BOIL for months thinking it would track gas prices—it doesn’t, not even close. I’ve watched long-term investors hold UNG expecting it to mirror the commodity—it won’t. This guide explains why, and what to do instead.
The Two Categories of Natural Gas ETFs
Before comparing individual funds, understand that natural gas ETFs fall into two fundamentally different categories:
Futures-based ETFs hold natural gas futures contracts. They track short-term price movements in gas relatively closely, but they suffer from contango-driven roll drag that destroys long-term returns. UNG and BOIL are the main examples. These are short-term trading tools.
Equity-based ETFs hold stocks of natural gas companies. They don’t have contango risk, and they can perform well over the long term if the underlying companies create value. But they’re affected by equity market factors beyond just gas prices. FCG is the main example.
Most retail investors who want natural gas exposure are better served by equity-based ETFs for anything beyond a few weeks’ timeframe. This is a slightly counterintuitive conclusion—you’d think futures-based funds would track the commodity better—but the structural destruction of contango makes equity-based funds the more practical choice for most investors. Our detailed breakdown of how contango works in natural gas ETFs explains the math in full.
The Main Natural Gas ETFs: A Ranked Overview
1. First Trust Natural Gas ETF (FCG) — Best for Long-Term Investors
FCG tracks the ISE-Revere Natural Gas Index, which holds a portfolio of stocks of companies significantly involved in natural gas exploration and production. As an equity ETF, it carries no futures roll drag.
- What it holds: Natural gas exploration and production stocks (EQT, Range Resources, Antero Resources, Devon Energy, and similar)
- Expense ratio: 0.60%
- AUM: Approximately $300–400 million (varies)
- Best for: Investors who want multi-month or multi-year natural gas sector exposure without the contango drag
- Watch out for: FCG tracks the E&P stocks, not gas prices directly. In risk-off equity markets, it can sell off even when gas prices are rising. Correlation to gas prices is meaningful but not perfect, especially over short periods.
FCG is arguably the best vehicle for most retail investors who have a medium-to-long-term thesis on natural gas—whether driven by LNG export growth, energy transition dynamics, or domestic supply constraints. The equity wrapper adds diversification within the sector, and the 0.60% expense ratio is reasonable for active management of a focused sector portfolio.
2. United States Natural Gas Fund (UNG) — Best for Short-Term Trading
UNG is the default choice for traders who need liquid, accessible natural gas price exposure in a standard brokerage account. It tracks the front-month NYMEX Henry Hub Natural Gas futures contract.
- What it holds: Front-month NYMEX NG futures
- Expense ratio: ~1.24%
- AUM: ~$500–600 million
- Best for: Short-term (days to a few weeks) event-driven trades on natural gas price direction
- Watch out for: Contango drag makes it unsuitable for holds beyond a few weeks in normal market conditions. Long-term holding is extremely value-destructive—down approximately 89% over the past decade despite gas prices being at similar levels. The real cost is not the 1.24% expense ratio but the annual roll drag of 8–12% in contango markets.
Valid use cases: buying UNG ahead of a potentially bullish EIA storage report, holding for days during a cold weather spike, or getting exposure while waiting to open a futures account. Not valid: holding UNG as a “set and forget” natural gas position.
3. ProShares Ultra Bloomberg Natural Gas (BOIL) — For Aggressive Short-Term Traders Only
BOIL seeks 2x the daily return of the Bloomberg Natural Gas Subindex. It delivers leveraged exposure with all the associated risks.
- What it holds: Natural gas futures contracts, structured for 2x daily leverage
- Expense ratio: ~0.95%
- AUM: ~$100–200 million (highly variable based on gas market sentiment)
- Best for: Traders with very short-term (1–5 day) high-conviction directional views on natural gas prices, comfortable with 10–20% daily swings
- Watch out for: Volatility decay (beta slippage) destroys returns in choppy markets even if average price moves in your direction. Contango drag. High daily volatility. BOIL has experienced losses of 80%+ in short periods. This is the riskiest product on this list by a significant margin.
BOIL is not an investment vehicle. It’s a short-duration speculative instrument for traders who understand exactly what they’re doing and can absorb significant short-term losses. If you’re buying BOIL because you think natural gas will be higher in six months, you’re misusing the product.
4. ProShares Short Bloomberg Natural Gas (KOLD) — For Bearish Traders
KOLD is the inverse counterpart to BOIL—it seeks -2x the daily return of the Bloomberg Natural Gas Subindex. Useful for short-term bearish views on natural gas prices.
- What it holds: Inverse leveraged natural gas futures exposure
- Expense ratio: ~0.95%
- Best for: Short-term (1–5 day) bearish trades on natural gas prices
- Watch out for: All the same volatility decay and leverage risks as BOIL, but in the opposite direction. Can lose money fast in a weather-driven spike. Also, in a persistent contango environment, KOLD actually benefits slightly from positive roll yield—making it structurally more favorable than BOIL in normal market conditions.
5. United States 12 Month Natural Gas Fund (UNL) — Reduced Contango Exposure
UNL is a less-known alternative to UNG that holds a portfolio of natural gas futures contracts spread across the next 12 months, rather than concentrating entirely in the front-month contract. This approach reduces—but doesn’t eliminate—the contango drag, because contango typically affects the front month most severely.
- What it holds: Equal-weighted positions across the first 12 months of NYMEX NG futures
- Expense ratio: ~1.04%
- AUM: Smaller than UNG (less liquid)
- Best for: Investors who want reduced roll drag compared to UNG but still want futures-based exposure. Better for multi-month holds than UNG, though still inferior to FCG for long-term.
- Watch out for: Lower liquidity and wider bid-ask spreads than UNG. Still suffers from contango drag in the deferred months, just less acutely than front-month exposure.
What About Natural Gas Stocks vs. ETFs?
For investors with the bandwidth to do individual company research, owning natural gas E&P stocks directly offers more control and can generate better returns than any ETF:
EQT Corporation (EQT): The largest natural gas producer in the US by volume, primarily operating in the Appalachian Basin. EQT provides concentrated natural gas price exposure with significant operational leverage to gas prices.
Range Resources (RRC): Appalachian gas producer with low-cost operations and significant NGL production alongside natural gas.
Antero Resources (AR): Known for its large hedge book—Antero often locks in future gas prices at advantageous levels when the market allows, reducing earnings volatility.
Kinder Morgan (KMI): The largest natural gas pipeline operator in the US. More of an infrastructure/midstream play than a pure gas price bet, but benefits from increased gas throughput volumes regardless of price direction.
Individual stocks offer more alpha potential than ETFs but require more research and carry company-specific risk. FCG provides a diversified basket of these stocks at a reasonable cost for investors who want sector exposure without stock selection risk.
How to Choose: A Decision Framework
Here’s a simple decision tree for selecting the right natural gas investment vehicle:
- Holding period under 2 weeks, specific price catalyst: UNG (or BOIL if you want leverage and fully understand the risks)
- Holding period 1–6 months, bullish gas view: FCG or individual E&P stocks—avoid futures-based ETFs
- Long-term (6+ months), energy sector bullish: FCG, diversified energy ETFs, or individual natural gas company stocks
- Want to short natural gas short-term: KOLD (understanding volatility decay) or short UNG shares
- Sophisticated investor with futures account: Trade NYMEX NG futures directly—eliminates ETF structure costs entirely
The single most important question to ask before buying any natural gas ETF: How long am I planning to hold this? The answer almost entirely determines which product makes sense. For anything beyond a few weeks, the equity-based alternatives are almost always superior to futures-based ETFs.
Natural Gas ETFs in the Broader Energy Investing Context
Natural gas ETFs are one component of a broader energy investing toolkit. Investors who hold both energy equity ETFs (like XLE or VDE, which have significant natural gas exposure through companies like EQT and Kinder Morgan) and a small allocation to short-term natural gas futures ETFs can get both the long-term equity appreciation and the ability to express near-term commodity price views.
Understanding how natural gas pricing works at the Henry Hub level—and what drives the commodity price that all these ETFs ultimately follow—is essential context for any natural gas ETF position. Our overview of Henry Hub pricing and our analysis of natural gas supply and demand provide that foundational context.
For traders who want the most direct price exposure and understand the risks, the natural gas futures market—accessible through the NYMEX—remains the most efficient and transparent vehicle. For everyone else, FCG for the long term and UNG for short-term trades is the practical approach.