The VanEck Vectors Coal ETF (KOL) may no longer be trading as of December 22, but that only opens up opportunities for ETF investors to play a move away from fossil fuels. One fund to consider is the VanEck Vectors Low Carbon Energy ETF (SMOG), which has been delivering returns of over 100% this year based on Morningstar performance numbers.
With a Joe Biden administration ready to take over the White House, his emphasis on clean energy could negatively impact fossil fuels. With a potential move away from coal, this could have been an impetus for the fate of the KOL fund.
“The only coal-focused exchange-traded fund is closing at 12 years old, another sign of investors’ desire to withdraw from the industry,” a Barron’s article noted. “The VanEck Vectors Coal ETF, which went public in January 2008 under the ticker KOL, stopped trading this month and will return investors’ money on Dec. 22. It had about $35 million in assets. At its height in 2011, the ETF had $908 million, said Ed Lopez, head of ETF Product at VanEck Associates.”
“In a statement, VanEck said it ‘continuously monitors and evaluates its ETF offerings across a number of factors, including performance, liquidity, assets under management and investor interest, among others. The decision was made to liquidate the fund based on an analysis of these factors,'” the article added further.
Up, Up and Away Towards 100% Gains
Environmental, social, and governance (ESG) investing has been an obvious strong performer despite the pandemic. SMOG gives ETF investors an ESG-related play that focuses specifically on low carbon initiatives.
SMOG seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Global IndexSM (Extra Liquid). “Low carbon energy companies” refers to companies primarily engaged in alternative energy, including renewable energy, alternative fuels, and related enabling technologies (such as advanced batteries).
The fund’s YTD chart shows how SMOG soared past its pre-pandemic levels earlier this year. Its been consistently above its 50- and 200-day moving average since October.
Looking at its relative strength index (RSI) technical indicator, its YTD chart shows overbought territory as well as in its 3-month chart below. For ETF investors looking for an area of value, they may want to keep an eye on that RSI level as well as its 50-day moving average to see whether the price dips closer to that average.
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