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3 Energy ETF Plays for Year-End

NEW YORK ( TheStreet) -- With the shakeup in Congress, forecasts of rampant economic growth across developing regions of the globe, and winter upon us, the energy industry looks promising as we head into the close of 2010.

Using ETFs, investors can gain access to some of the most attractive aspects of this multifaceted industry.

Market Vectors Coal ETF (KOL)

Economic forecasts for the coal industry in 2011 already appear promising given the growth prospects for emerging nations including India and China. As these nations seek ways to quench their insatiable thirsts for energy, coal will be an essential element.

Using Market Vectors Coal ETF, investors can get a front row seat to the coal industry's ascension. This fund is designed to track an index comprised of the largest and most liquid coal-related companies from around the globe. While producers and miners dominate its underlying holdings, KOL also sets aside a significant percentage of its portfolio for companies responsible for equipment and power generation. This makes for a well diversified play on the industry as a whole.

KOL will benefit from the resource's popularity across both emerging markets and the developed world. The United States and China command the fund's two largest geographic slices, representing 47% and 20% of the fund respectively.

Major KOL components include China Shenhua Energy, Peabody Energy (BTU - Get Report), China Coal, Joy Global (JOYG) and Consol Energy (CNX).

First Trust ISE Revere Natural Gas Index Fund (FCG) (FCG)

A consistent favorite among investors and market commentators, natural gas will be in the spotlight as consumers crank up their thermostats in order to battle against the bite of winter. Playing this fuel, however, can be easier said than done.

Futures-based products such as iPath Dow Jones UBS Natural Gas Total Return Subindex ETN (GAZ) and United States Natural Gas Fund (UNG) have been locked on a steep downward path, leading to brand new all time lows. GAZ has been particularly troublesome as of late thanks to the massive premium it has developed.

While funds which tracking the physical commodity have faced their share of problems, equity-based products such as First Trust ISE Revere Natural Gas Index Fund and Fidelity Natural Gas Fund (FSNGX) have managed to perform in a far more stable manner. The two funds have seen a 10% jump over the past 30 days.

As Chevron's (CVX - Get Report) acquisition of Atlas Energy (ATLS) demonstrates, major names in the energy industry are willing to pay a big premium to gain exposure to the natural gas industry. This has lead many integrated oil majors including ExxonMobil (XOM) and BP to be included within indices aimed at the natural gas industry.

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BTU $5.60 0.00%
CVX $105.26 0.01%
FCG $10.69 0.00%
KOL $13.18 0.00%
NLR $49.51 1.60%


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