A commodity-related subsector in exchange traded funds that was flying high in 2011 until late July/early August is that of coal producing equities.
Market Vectors Coal (NYSEArca: KOL) and PowerShares Global Coal (NasdaqGM: PKOL) actually declined as much as 46% and 41% respectively from peak (mid-July) to trough (early October) before recently rebounding sharply along with the rest of the equity market.
Both funds actually popped above their 50-day moving averages on Monday and we will monitor these closely to see if they hold at these levels. It is important for the investor to understand that these ETFs are not backed by physical coal, but instead invest in equities that derive large portions of their revenues from the coal industry, which includes exploration, mining, and other service related functions. [ETF Spotlight: Coal]
KOL tracks the Stowe Coal Index, and has roughly 53% of its exposure outside of the U.S. with the remainder invested in U.S. based equities. Currently, top holdings are Chinese listed China Shenhua Energy (8.98%), CNX (8.58%), JOYG (8.40%), BTU (8.27%), and ANR (7.39%).
PKOL also offers global equity exposure in the Coal space, tracking the Nasdaq OMX Global Coal Index and owns many of the same names as KOL. The top five holdings in PKOL are currently China Shenhua Energy (9.07%), BTU (7.87%), CNX (7.59%), CCJ (6.73%), and ANR (5.50%).