Profile image
By ETF Daily News (Reporter)
Contributor profile | More stories
Story Views

Last Hour:
Last 24 Hours:

After A Huge Run, How Much Higher Can The Coal ETF Go?

Thursday, January 5, 2017 5:57
% of readers think this story is Fact. Add your two cents.

From Zacks: Coal-focused ETF VanEck Vectors Coal ETF (KOLFree Report) is set for an optimistic start to 2017 after around 100% jump in 2016. The black diamond has long been spiraling down due to the growing popularity of alternative energy sources. Global warming and high fuel emission issues associated with coal as well as the development of new and advanced technologies making clean power more usable curbed the demand for coal.

China, Trump’s win and natural gas prices could act as a tailwind for the industry. Last year, China brought about a policy to lower its dependence on coal and cut its output to below the required amount, leading to a rally in coal prices.

On the other hand, the U.S. president-elect has promised to revive the downtrodden coal industry and scrap stringent regulations. He plans to bring back the traditional energy businesses of coal, oil, and gas and has expressed skepticism about global climate change in his campaign. So Trump’s win could be counted as a boon for the industry (read: Sector ETFs Hitting 52-Week High on Trump’s Victory).

Meanwhile, natural gas price is also a major influence on the space. Natural gas, a close competitor to coal, has grabbed market share in electricity generation owing to a fall in price. The fall of natural gas prices to multiyear lows was primarily due to the shale gas boom across the U.S. that led to a surge in natural gas production.

However, thing are changing for the better for KOL. As per data from U.S. Energy Information Administration (EIA), natural gas inventory drawdown was beyond analyst expectations for the week ended December 23. The production cut by Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers is also supporting the natural gas prices. A rise in natural gas prices can have a positive impact on coal price (see all Energy ETFs here).

However, export data for the industry is also not looking good. U.S. coal exports have declined in the last couple of years. This number could worsen with the fifth-largest market for U.S. coal, Canada planning to accelerate its investments in clean energy.

Although alternative energy sources — natural gas and renewables like wind and solar energy — do pose a threat to coal, it remains a dominant source of power generation worldwide. Coal accounts for more than one-third of the total electricity produced in the U.S. However, at current levels, it’s getting tougher for coal to compete with cheaper natural gas alternatives (read: Are the Dark Days of Coal ETF Really Over?).

Despite the challenges, investors buying on this Trump induced optimism can focus on the only pure play ETF targeting the coal industry.

Coal ETF in Focus

KOL tracks the MVIS Global Coal Index. Holding 28 securities in its basket, the fund is concentrated in the top 10 holdings at about 61% of the total assets. It has a China focus accounting for 23.4% of the portfolio, while U.S., Australia and Canada round off the next three spots with double-digit weight each.

The fund has amassed $101.5 million in its asset base and trades in an average daily volume of 182,000 shares. Expense ratio comes in at 0.59%. KOL has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook (read: 5 ETFs Up Over 100% This Year).

The Market Vectors Coal ETF (NYSE:KOL) was unchanged in premarket trading Thursday. Year-to-date, KOL has gained 2.69%, versus a 1.36% rise in the benchmark S&P 500 index during the same period.

KOL currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #30 of 38 ETFs in the Energy Equities ETFs category.

This article is brought to you courtesy of Zacks Research.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (


We encourage you to Share our Reports, Analyses, Breaking News and Videos. Simply Click your Favorite Social Media Button and Share.

Report abuse


Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories



Top Global


Top Alternative




Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.