GreenHaven Plans Futures-Based Coal ETF
June 27, 2012
GreenHaven Coal Services, an Atlanta-based subsidiary of GreenHaven Group LLC, filed paperwork with U.S. regulators to serve up what would be the market’s first futures-based coal ETF, tapping into one of the cheapest sources of energy.
The GreenHaven Coal Index Fund would track the Tradition Coal Index and invest primarily in CME Central Appalachian coal futures contracts. The fund will invest in second-, third- and fourth-to-expire CME Central Appalachian coal futures contracts, the filing said.
The fund, which is a commodity pool, would also capture interest income from some U.S. Treasurys exposure, the prospectus said.
Coal is a viable source of energy not only because it’s cheaper than other sources including oil, gas, wind and solar, but also because it’s an abundant commodity both in the U.S. and in China. Its major drawback is that it doesn’t burn very cleanly and, moreover, contributes to greenhouse gases.
The largest coal ETF on the market today is an equities-based strategy, the Market Vectors Coal ETF (NYSEArca: KOL), which owns global coal companies with the bulk of the exposure focused on U.S. names.
KOL has gathered some $193 million in assets since it came to market in 2008, which compares to the $9.1 million the similar PowerShares Global Coal Portfolio (NYSEArca: PKOL) has attracted since it launched that same year.
But KOL has shed more than 23 percent year-to-date and has tallied losses of nearly 48 percent in the past year, according to information on Van Eck’s website. PKOL has fared a little better, plunging only 32 percent in the past 12 months, according to PowerShares data.
GreenHaven’s fund would join other GreenHaven commodities funds such as the $494.1 million GreenHaven Continuous Commodity Index Master Fund (NYSEArca: GCC).