We are disappointed that WisdomTree closed and liquidated TONS (WisdomTree Coal Fund) back in September of last year. That fund was the only “Coal Futures” based product on the market, but we can still look at an equity oriented fund that invests in Coal Producers known as KOL (VanEck Vectors Coal, Expense Ratio 0.59%, $101 million in AUM).
KOL, having debuted back in 2008, is reasonably popular in terms of daily trading as it averages about 157,000 shares traded daily on a three-month rolling average basis, and it has risen more than 27% since its September 2016 lows to present levels, greatly outperforming broader “Energy Equity” proxies during this time frame.
KOL has outlasted other products in the “Coal” space, as TONS is not the only fund to have closed in the past due to lack of interest. KOL is likely useful to those portfolio managers that may want access to this niche sector, especially if it has “legs” in a Trump administration that is seen as favoring a huge shake-up on the EPA and climate change policy space.
KOL holds twenty-nine individual equities, including both U.S. listed stocks as well as ordinary shares listed in overseas markets such as China, for example, so it provides access to the segment within an ETF wrapper from an international perspective. In fact, from a country breakdown standpoint, China carries the heaviest weighting at 20%, followed by Indonesia and Australia both with 17% weightings apiece in the portfolio, while the U.S. and Canada follow in terms of allocations at 13% and 12% respectively.
Notably, the “U.S. Coal Industry” has a much lesser representation in the context of the overall portfolio here presently than it has had historically, namely due to a rash of bankruptcies that hit the sector in 2016 and 2015 including the likes of Peabody Energy Corp., Arch Coal Inc., Alpha Natural Resources, Walter Energy Inc., Patriot Coal Corp., and Xinergy Corp. Such names used to be represented in KOL but alas these companies are no longer viable entities, and the top holdings in the fund have a much different look today than in the past: 1) China Shenhua Energy Co Ltd. H (8.24%), 2) TECK (7.91%), 3) Aurizon Holdings Ltd. (7.20%), 4) United Tractors Tbk (6.23%), and 5) Exxaro Resources Ltd. (5.18%).
The Market Vectors-Coal ETF (NYSE:KOL) was trading at $13.34 per share on Thursday afternoon, up $0.05 (+0.38%). Year-to-date, KOL has gained 8.81%, versus a 4.87% rise in the benchmark S&P 500 index during the same period.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.