Invest in Coal Funds - dummies

By Nick Hodge, Jeff Siegel, Christian DeHaemer, Keith Kohl

Energy investors can use coal funds to gain diversified exposure to the industry and generate income with a single purchase. Master limited partnerships (MLPs) own coal resources and lease them to mining companies, passing on the proceeds directly to investors. Exchange-traded funds (ETFs) track the combined performance of several companies whose main operations are in the coal sector.

Additionally, you can use coal indexes to get an overall gauge of how the industry is performing. The two most-watched indexes for the coal sector are the Stowe Global Coal Index (COAL) and the Dow Jones U.S. Coal Index (DJUSCL).

The COAL tracks 36 companies with a total market cap of $196.2 billion, with the average being $5.5 billion. You can see its top ten constituents in this table.

Stowe Global Coal Index’s Top Ten Constituents
Company Ticker Country Weight (Percentage)
China Shenhua Energy HK: 1088 China 8.4%
Joy Global NYSE: JOY United States 8.3%
China Coal Energy HK: 1898 China 8.2%
Peabody Energy NYSE: BTU United States 7.6%
Consol Energy NYSE: CNX United States 7.5%
Yanzhou Coal Mining NYSE: YZC China 4.6%
Alpha Natural Resources NYSE: ANR United States 4.6%
Inner Mongolia Yitai HK: 3948 China 4.5%
Adaro Energy Jakarta: ADRO Indonesia 4.4%
Walter Energy NYSE: WLT United States 4.4%