Rising Commodity Prices Are Fueling The Coal ETFs (KOL, PKOL, SLX, XME)
“For most of the past 50 years, since the birth of environmental awareness, coal has been the “black sheep” of the power-production family. Now, thanks to more efficient furnaces, better exhaust-scrubbing systems and other technological advances, coal is regaining favor in the world’s energy markets. However, the biggest factor in coal’s recent price surge is steadily increasing demand for the fossil fuel in power generation and steel-making process, abetted by rising costs for other types of fuel, like oil and natural gas,” Larry Spears Reports From StockHouse.
Spears goes on to say, “Unlike with many other popular commodities, individual investing in coal is generally not a simple matter of buying basic futures or forward contracts. That’s because different types of coal have extreme variances in quality. Coal prices also tend to move separate from coal fundamentals themselves. Instead coal prices track the changes of other energy commodities, primarily crude oil and natural gas, as well as certain hedging commodities such a gold. This was illustrated quite clearly the past three years.”
“So, assuming the demand will continue to grow – and oil prices will keep rising, dragging coal and gas along – how should you play the move? Exchange-traded funds (ETFs) are among the best choices as there are at least four that take heavy positions in coal-related issues, including two that target coal specifically. All are up significantly in price since the March 2009 market bottom, but they should have ample room left to climb as the recovery gathers added steam,” Spears Reports.
We have put together some details on the four ETF’s mentioned for the article below:
Market Vectors Coal ETF (NYSE: KOL):
The investment ETF (KOL) seeks replicate as closely as possible, before fees and expenses, the price and yield performance of the Stowe Coal index. The fund normally invests at least 80% of total assets in equity securities, which may include depositary receipts, of U.S. and foreign companies principally engaged in the coal industry. It normally invests at least 95% of total assets in securities that comprise the index. It is nondiversified.
|TOP 10 HOLDINGS ( 62.13% OF TOTAL ASSETS)|
PowerShares Global Coal ETF (NYSE: PKOL):
The investment ETF (PKOL) seeks to replicate, net of expenses, the NASDAQ OMX Global Coal Index. The fund normally invests at least 90% of assets in the securities and ADRs and GDRs based on the securities that comprise the underlying index. It normally invests at least 80% of its total assets in securities of companies involved in the coal industry. The index is designed to measure the overall performance of globally traded securities of the largest and most liquid companies involved in the coal industry. The fund is nondiversified.
Market Vectors Steel ETF (NYSE: SLX):
The investment ETF (SLX) seeks to track the price and yield performance, before fees and expenses, of the AMEX Steel index. The fund invests at least 80% of assets in common stocks and ADRs of companies involved in the steel industry. The fund is nondiversified.
|TOP 10 HOLDINGS ( 68.83% OF TOTAL ASSETS)|
SPDR S&P Metals & Mining ETF (NYSE: XME):
The SPDR® S&P® Metals and Mining ETF (XME) seeks to replicate as closely as possible, before expenses, the total return performance of the S&P Metals and Mining Select Industry® Index (ticker:SPSIMMTR). Our approach is designed to produce portfolios with low portfolio turnover, accurate tracking, and lower costs.
|Name||Weight||Total Mkt Cap M||Shares Held|
|Titanium Metals Corp||4.60%||$ 3,080.93||2,636,362|
|Cliffs Natural Resources In||4.41%||$ 10,136.71||578,952|
|Reliance Steel & Aluminum C||4.39%||$ 4,056.65||785,544|
|United States Stl Corp New||4.26%||$ 9,886.80||606,694|
|Allegheny Technologies Inc||4.20%||$ 5,540.90||733,430|
|Walter Energy Inc||4.20%||$ 5,197.85||425,284|
|Patriot Coal Corp||4.19%||$ 2,034.62||1,841,418|
|Royal Gold Inc||4.17%||$ 2,111.17||819,025|
|Carpenter Technology Corp||4.14%||$ 1,669.33||1,072,287|
|Massey Energy Corp||4.12%||$ 5,205.34||740,757|