Coal ETF Up 11% in Month Before Election
November 6th at 9:37am by John Spence
One of the best-performing ETFs in the month leading up to the presidential election is Market Vectors Coal (NYSEArca: KOL), which has rallied nearly 11%.
Coal and other energy ETFs could be impacted by who sits in the White House the next four years.
For example, Mitt Romney has said he supports the coal industry and hinted he would ease regulations on the industry. “I like coal,” he said during the first debate.
“These stocks have been volatile, but you can’t discount what a man running for president said about coal. Call it the Romney rally,” Sterne Agee analyst Michael Dudas said in a Reuters report.
“There is investor perception that Romney would be a better advocate for coal,” added Lucas Pipes, of Brean Murray Carret & Co.
“In my administration, coal will not be a four-letter word,” Romney said previously.
The U.S. coal industry generates about 40% of the county’s electricity, according to a WSJ.com report.
“In the past, the president has said he supports coal when coupled with technologies that prevent emissions from escaping into the atmosphere. His administration has invested in the development of clean-coal technologies, but the most effective technologies are generally expensive and unproven,” the report said. “Obama has been a much bigger champion of natural gas, a cleaner-burning alternative to coal that is seeing fast-rising production in the U.S.”
KOL, the coal ETF, is down about 20% this year despite the recent rally. Over 60% of the portfolio is in non-U.S. stocks, according to Morningstar. Trading volume in the ETF has been picking up since Romney made his coal comment during the first debate in early October.
President Barack Obama has been a proponent of clean energy. There are several ETFs in the category although they don’t have much in the way of assets. PowerShares WilderHill Clean Energy Portfolio (NYSEArca: PBW) is the largest with $122.4 million.
PBW is down about 4% the past month. U.S. Natural Gas Fund (NYSEArca: UNG) is off about 5%.
Market Vectors Coal
The opinions and forecasts expressed herein are solely those of John Spence, 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.