Commodity ETF investing: Own 42 coal mining companies with KOL
Whether it’s a recession or an economic boom, one thing doesn’t change, the need for energy. And until technology leaps ahead, coal is the largest producer of fuel for the generation of electricity in the world. It’s also the most abundant fossil fuel in the United States. Coal is obviously not recession immune as people tighten the reigns on their lives and cut back on electricity consumption, but the shear necessity of electricity makes the coal industry fairly resistant. An investment in an exchange traded fund (ETF) that is centered on the coal industry is a great way to hedge your bets by investing in a pool of successful companies in the coal field.
Market Vectors Coal ETF (NYSE: KOL) seeks to replicate the price and yield performance of the Stowe Coal index, which provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. With KOL you’ll own shares of some of the most noted coal companies in the world, including Arch Coal Inc. (NYSE: ACI), which specializes in steam and metallurgical coal; CONSOL Energy Inc. (NYSE: CNX), a large provider of fuel for electricity in the United States; Alpha Natural Resources Inc. (NYSE: ANR), another leader in steam and metallurgical coal; and Peabody Energy Corp. (NYSE: BTU), an exploration miner and coal producer worldwide, as well as several other highly rated coal companies across the globe.
Market Vector charges only a 0.65% fee, a fraction what a professional money manager would charge you to analyze research and pick coal mining stocks with this level of global reach. Recently KOL has gone through a typical correction for this commodity sector, but then suffered a greater hit as Asia saw a 20% decline in spot prices for thermal coal. The result? A better deal for those currently willing to dive into coal as an investment. KOL is up 14%, so maybe there’s some light at the end of the mine.
The top 10 of 42 holdings of KOL are listed below, and as we mentioned above, there’s a strong global presence.
5.78% Alpha Natural Resources
7.42% Arch Coal Inc.
5.09% Bucyrus International Inc.
4.98% China Coal Energy
8.24% China Shenhua Energy
6.24% Cons Energy Inc.
4.57% Joy Global Inc.
7.93% Peabody Energy Corp.
6.67% PT Bumi Resources
4.67% Walter Industry
ETF Portfolios: Obama Trade — Alternative energy stocks with GEX
One of Obama’s top priorities is making our nation energy independent with alternative energy. A barrel of oil trades in the $60s and has been coming down for awhile. But over time, energy will probably rise. If our country can build energy independence, it creates jobs, helps our national security and stops the dramatic wealth transfer to potential enemies of our country.
If Obama does what he promises, there will be more investments in the alternative energy field. Instead of trying to pick the best stocks and learn all about these companies, you can own one stock, an ETF (exchange traded fund) that is a basket of the top companies in this sector.
The Market Vectors Global Alternative Energy ETF (NYSE: GEX) is a low cost way to play alternative energy. GEX is built around an index developed by Ardour Global which includes companies that generate power through eco friendly and non-traditional sources. It started the year at $60.45 and has corrected down to $23.27 today.
Buy GEX as you would any other stock at your online stock broker, and you’ll own a basket of companies including First Solar, Inc. (NASDAQ: FSLR) which makes solar power modules, Itron, Inc. (NASDAQ: ITRI) which lets utilities do meter reading through wireless transmission, Suntech Power (NYSE: STP) which makes photovoltaic solar cells (PV cells) and solar electric systems and Vestas Wind Systems (NASDAQ: VWSYF), in Denmark which is the world’s largest wind turbine manufacturer with some 35,000 wind turbines installed.
Market Vectors charges only a .65% fee for GEX to run computer models in order to maintain this ETF basket – a lot cheaper than mutual funds who pay managers to “beat the market” by selecting the best stocks. The top 10 holdings are listed below and include 66.38% of all total assets. Many of these stocks are located in foreign countries so you get currency and global exposure.
| Company | % Assets |
| FIRST SOLAR, INC. | 9.94 |
| GAMESA | 7.06 |
| ITRON INC | 4 |
| Q-CELLS | 5.49 |
| RENEWABLE ENERGY | 4.75 |
| SOLARWORLD | 4.62 |
| SUNPOWER CORPORATION | 4.42 |
| SUNTECH POWER HLDGS | 4.88 |
| OEST ELEKTRIZITATSWIRTS-A | 4.98 |
| Vestas Wind Systems | 16.24 |
ETF Investing: We Still Get Sick — Even In Recessions! XPH and IHI For Healthcare
Everyone is going to get sick at some time in their lives. It could be something as simple as the common cold or a complex series of symptoms that takes years to diagnose. The upside of all of this is that the medical business is a relatively safe bet when it comes to investments. If you see the benefit of this and want to put some money into a health care related investment, look into an Exchange Traded Fund (ETF) that will give you the opportunity to hold shares in several different companies rather than trying to guess who’s going to come up with the next miracle cure.
There are a couple different companies that let you get your feet wet in the medical field. You could invest in medical devices, which covers everything from stethoscopes to complicated surgical tools. iShares Dow Jones US Medical Devices ETF (NYSE: IHI) lets you in on an investment that includes leaders in the field such as Boston Scientific Corporation (NYSE: BSX), Medtronic, Inc. (NYSE: MDT), and Covidien, Ltd. (NYSE: COV). Each of these companies provides medical devices that hospitals simply cannot do without.
IHI looks to achieve results that correspond to the Dow Jones US Select Medical Equipment index and through a computer aided system, rather than by using money managers, they’re able to charge only a 0.48% fee to maintain your stock.
Another great way to invest in the healthcare business is to buy shares in the companies who work tirelessly to provide lifesaving drugs. The Exchange Traded Fund SPDR S&P Pharmaceuticals (XPH) lets you in on several of the top pharmaceutical companies in the world by following a passive management strategy that tracks the total return performance of the S&P Pharmaceutical Select Industry index.
With only a 0.35% fee to maintain XPH, you can see why using a computing system to select the pharmaceutical mix is more cost effective than the traditional money manager system. Their impressive list of top 10 holdings is listed below:
4.87%: ALPHARMA INC (NYSE: ALO)
4.86%: BARR PHARMA INC (NYSE: BRL)
4.9%: BRISTOL MYERS SQUIBB (NYSE: BMY)
4.88%: JOHNSON AND JOHNSON DC (NYSE: JNJ)
4.89%: MERCK CO INC (NYSE: MRK)
4.9%: PFIZER INC (NYSE: PFE)
4.9%: SCHERING PLOUGH CP (NYSE:SGP)
4.93%: Sepracor Inc. (NASDAQ: SEPR)
4.84%: VALEANT PHARMA INTL (NYSE: VRX)
4.97%: WATSON PHARMACEUTICALS (NYSE:WPI)
Hedge Inflation with two gold ETF ideas: GDX and GLD
It seems that everywhere you turn you hear something about the price of gold, from analysts to commercials encouraging you to sell your old jewelry for big bucks. If you’re tempted, how about a bit safer investment in the commodity? Let your money work for you — invest in an Exchange Traded Fund (ETF) that hold shares in several different gold producers, and you can ride the wave of the industry.
Market Vectors Gold Miners ETF (AMEX: GDX) is a perfect opportunity to ride this wave with as the fund’s goal is to mimic the price and yield performance of the AMEX Gold Miners index, before fees and expenses. This is a nondiversified fund that is comprised of several well known companies whose main operations involve gold and silver mining.
There are two reasons to buy GDX instead of the SPDR Gold Trust (NYSE: GLD) or the iShares Comex Gold Trust (NYSE: IAU) both of which are pure gold ETFs (you own a share of gold sitting in a safe). First, the ratio between gold and the value of the gold held by miners has been relatively stable for 30 years. But today, the gold miners are selling at 33% of that historical ratio, so bulls say it’s better to buy the miners, not the metal. Second, the biggest expense of a mining company is energy. Oil today hit $54 per barrel, down 63% from a peak of $147. This adds to the profits of the Gold Miners.
Your investment basket with GDX will include companies such as Agnico-Eagle Mines Ltd. (NYSE: AEM), a gold mining company with mines in Quebec, Finland, Mexico and Nunavut; Barrick Gold Corporation (NYSE: ABX), a mining company with a broader reach, mining for gold, silver, copper and zinc; Gold Fields Ltd. (NYSE: GFI), a strictly gold operation running out of South Africa, Ghana, Australia and Peru; and AngloGold Ashanti Ltd. (NYSE: AU) with gold minds in South African and internationally.
Market Vectors charges only a 0.55% fee to maintain GDX using computers rather than money managers. Take heed, though, as gold prices have dropped nearly 10% in the past three months and GDX has dropped roughly 50%. It’s not a sure gamble, but if you feel strongly about this commodity market it’s a safer bet than putting all of your money into one individual company.
The top 10 holdings of GDX are listed below and it’s hard not to take notice of the heavy concentration on
global exposure in this industry.
5.28% AGNICO EAGLE MINES
5.06% ANGLOGOLD ASHANTI
12.28% BARRICK GOLD
4.55% ELDORADO GOLD CORP
4.39% GOLD FIELDS LTD ADS
10.01% GOLDCORP INC
5.07% KINROSS GOLD CORP
8.44% NEWMONT MINING
5.57% Randgold Resources Limited
4.4% YAMANA GOLD
A sector ETF with yield: Own 44 global telecoms with IXP
The telecom business is definitely not recession-proof, as those that have followed the industry have recently realized, but it is not a field that is going to fade into the horizon any time soon either. Simply
put, people need to communicate and the telecom business is poised to continue rolling with the new technology and bringing people what they need. If you see the value of telecom companies and agree that their future is, perhaps not golden, but definitely strong, then an investment in an Exchange Traded Fund (ETF) is an excellent way to invest in the future of the telecom field without placing all of your trust in one specific company.
iShares S&P Global Telecommunications Sector ETF (NYSE: IXP) let’s you own shares in some of the most noted and reliable telecom companies by simply purchasing shares of the one ETF. With IXP you’ll find your investment basket is loaded with companies such as Amercia Movil, S.A.B. (NYSE: AMX) a fixed and wireless provider in Latin America, AT&T, Inc. (NYSE: T) a telecom provider for customers in the U.S. and worldwide, Verizon Communications (NYSE: VZ) a wireline and domestic wireless provider across the globe, as well as several other highly rated and well known telecom leaders.
iShares charges only a 0.48% fee to maintain IXP using computers rather than money managers. IXP also has typically paid about $1.50 per year in dividends — IXP is down about (41%) this year so that’s about a 4% yield — and these companies seem to have the cash-generating ability to continue dividends.
Of the 44 stocks in IXP, the top 10 holdings total about 71% of all total assets. Take note of the global exposure you’ll get by investing in the future of the telecom industry:
17.19%: AT&T INC(NYSE:T)
10.61%: VODAFONE GROUP PLC(NYSE:VOD)
9.47% : TELEFONICA SA(NYSE:TEF)
9.05%: VERIZON COMMUNICATIONS IN(NYSE:VZ)
5.01%: CHINA MOBILE LTD(NYSE:CHL)
4.94%: FRANCE TELECOM SA(NYSE:FTE)
4.57%: DEUTSCHE TELEKOM AG-REG(NYSE:DT)
3.98%: NIPPON TELEGRAPH & TELEPHONE(NYSE:NTT)
3.21%: TELSTRA CORP LTD (Other OTC:TLS)
2.71%: BCE INCNYSE:BCE)