Last September, I said the new PowerShares Global Coal Portfolio (PKOL) was well-constructed but poorly timed in light of the bear market. Now, it might be a good time to revisit this exchange traded fund.
Coal stocks are generally more volatile than large oil companies. Adding more potential volatility to a portfolio during a bear market is probably a bad idea. Instead, investors should boost volatility after a big decline or as stocks rise. The market might be at that point now.
In that first article, I compared the PowerShares Global Coal Portfolio to the Energy Select Sector SPDR Fund (XLE), noting that the PowerShares fund would decline more in a down market. That trend played out, but the coal fund has since rebounded, soaring 69% this year as the SPDR fund rose 1.7%.
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