The last five years have been terrible for the coal industry; with the exchange traded fund for coal, Market Vectors Coal (NYSE: KOL) plummeting in value.
An exchange traded fund like Market Vector Coal owns a variety of securities from the asset class it represents.
In the coal industry, those have been crushed, too. Peabody Energy (NYSE: BTU), the blue chip for the sector, is down more than 40 percent for the year. Over the same period, Arch Coal (NYSE: ACI) has dropped by over 45 percent.
Market Vector Coal has fallen for the last quarter, six months, and year of market action (chart below).
For 2014, Market Vector Coal is down by just over 14 percent. Its diversity of assets has protected it against the plunges suffered by Arch Coal, Peabody Energy, and others in the sector. What is also protecting Market Vectors Coal from the carnage inflicted on other coal securities is that the coal industry is not going out-of-business. If anything, it is the opposite: the demand for coal is rising. It should continue to into the future, as well.
This is especially true for China and India, the two most populous countries in the world.
China uses pretty much as much coal as the rest of the world combined. Its usage will only increase, which is the same for other emerging market nations, also. Beijing wants to move away from using so much coal. But it is difficult to find a workable substitute. Oil is too expensive, even with the recent decline in price. There is not the pipeline infrastructure required for natural gas. Alternative energy is not even close to being able to meet the wide demands of the mass market.
Coal is thus the logical fuel of choice as developing countries in Asia such as China and India continue to add more coal-fired utility plants, which is very bullish for the future of Market Vectors Coal!