"The debate is heating up in Congress over the final shape of legislation aimed at reducing global warming. The outcome will have important repercussions for the coal and natural gas industries, and energy-focused ETF investors need to pay close attention to what's going on,"
Don Dion Reports From The Street.
Right now, natural gas is in trouble because coal has political protection. As I briefly mentioned in "Natural Gas Heads for Super Contango," natural gas faces a competitive threat from alternative energy, which would receive benefits under the House legislation. An executive of Devon Energy (DVN) was quoted by The New York Times giving the following blunt assessment: "By allowing free emission allowances to maintain coal production from existing coal plants, while providing mandates that there be more wind and solar, you squeeze gas out in the middle."
"If climate-change legislation passes as currently written, coal has an edge over natural gas. (KOL) beats (FCG), hands down. However, if climate-change legislation passes, will it be a Pyrrhic victory? Higher energy prices will crimp demand to the point that coal and natural gas may be fighting over which industry will lose the least," Dion Reports.
"The only clear winner from cap-and-trade is nuclear energy. The existing legislation would allow nuclear utilities to lift prices in tandem with other producers, but because nuclear utilities emit no CO2, their price increases all would drop to the bottom line. In that case, Market Vectors Nuclear (NLR) may be the best bet in ETFs. Alternative energy ETFs such as Market Vectors Solar (KWT) and PowerShares WilderHill Clean Energy(PBW) should benefit as well. Also, consider SPDR KBW Capital Markets(KBW), which has Goldman Sachs as its top holding. Carbon trading will be a lucrative business," Dion Reports.
Full Story: HERE
The ETF (FCG) seeks to replicate the ISE-REVERE Natural Gas index and the fund invests at least 90% of assets in common stocks that comprise the index. Here is a look at the top ten holdings below:
| TOP 10 HOLDINGS (FCG) ( 40.71% OF TOTAL ASSETS) |
|
| Company |
Symbol |
% Assets |
| CIMAREX ENERGY CO |
(XEC) |
3.94 |
| GOODRICH PET HLD NEW |
(GDP) |
3.71 |
| MARINER ENERGY INC |
(ME) |
4.29 |
| NEWFIELD EXP COM |
(NFX) |
3.72 |
| PENGROWTH EGY UTS |
(PGH) |
3.7 |
| PIONEER NATURAL RES |
(PXD) |
3.93 |
| QUICKSILVER RES INC |
(KWK) |
5.1 |
| SANDRIDGE ENERGY INC |
(SD) |
4.43 |
| ST MARY LAND EXPL |
(SM) |
3.82 |
| W&T OFFSHORE, INC. |
(WTI) |
4.07 |
|
|
The investment (KOL) seeks replicate as closely as possible, before fees and expenses, the price and yield performance of the Stowe Coal index. The fund normally invests at least 80% of total assets in equity securities, which may include depositary receipts, of U.S. and foreign companies principally engaged in the coal industry. It normally invests at least 95% of total assets in securities that comprise the index.
Take a look at the top holdings within the ETF (KOL) below:
| TOP 10 HOLDINGS (KOL) ( 62.42% OF TOTAL ASSETS) |
|
| Company |
Symbol |
% Assets |
| Bucyrus International, Inc. |
(BUCY) |
5.2 |
| China Coal Energy Co. Ltd. |
N/A |
8.47 |
| China Shenhua Energy Company Limited |
N/A |
7.76 |
| CONS ENERGY INC |
(CNX) |
6.58 |
| Joy Global Inc. |
(JOYG) |
7.26 |
| MASSEY ENERGY CO |
(MEE) |
4.86 |
| PEABODY ENERGY CORP |
(BTU) |
5.87 |
| PT Bumi Resources |
N/A |
6.96 |
| WALTER ENERGY, INC |
(WLT) |
4.31 |
| Yanzhou Coal Mining Company Limited |
N/A |
5.15 |
