After a year of poor demand and weak economic growth, coal related exchange traded funds are beginning to heat up as opportunists jump at the cheaper valuations.
The Market Vectors Coal ETF (KOL) and the PowerShares Global Coal Portfolio (PKOL) , which both track global coal producers, have gained over 4% so far this quarter. KOL has declined 21.0% and PKOL has dropped 16.4% year-to-date. [ETF Chart of the Day: Coal]
The Market Vectors Coal ETF tracks 35 coal producers. The fund’s top country allocations include the U.S. 38.3%, China 18.4%, Canada 10.3%, Indonesia 10.2% and Australia 10.1%. KOL has a 0.59% expense ratio.
The PowerShares Global Coal Portfolio follows 27 coal suppliers. Top country allocations include U.S. 32.3%, China 24.4%, Indonesia 17.4% and Australia 10.7%. PKOL has a 0.75% expense ratio.
While coal prices have suffered this year, the energy source is still a major component in the global power system, writes Eric Dutram for Zacks.
In the short-term, suppliers have been idling production, which should help support prices – coal has hit a bottom on per short ton basis, dropping below $50/st in thermal coal CAAP terms, Dutram said.
Additionally, coal watchers are also monitoring the election season closely in hopes that Romney would step in and provide a more pro-coal administration.
For more information on coal, visit our coal category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.