Coal Funds Clean Up While Gas Leaks

NEW YORK ( TheStreet) -- Exchange traded securities tied to the price of natural gas are leaking shareholder value.

The iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN ( GAZ), the worst-performing fund in the five trading days through Aug. 13, flamed off 7.6% of its market value. The exchange traded fund that tracks the performance of Henry Hub natural gas futures contracts, United States Natural Gas Fund LP ( UNG), lost 5.5% of its value. Henry Hub natural gas dropped 12% during that time.

Low price for gas is dissuading utilities from converting to more environmentally friendly and more expensive solar and wind power. Five of the worst-performing funds focus on clean-energy companies.

Leading the pack lower was the Market Vectors Solar Energy ETF ( KWT), which declined 4.9%. LDK Solar ( LDK) and JA Solar Holdings ( JASO), two holdings, each recorded declines of 21% after disappointing investors with quarterly losses. Other solar positions include China Sunergy ( CSUN), off 14%; Solarfun Power Holdings ( SOLF), also down 14%; and GT Solar International ( SOLR), off 12%.
Worst-Performing Energy Funds for the Week Ending Aug. 13
Fund (Ticker) Rating Fund Type 1 Wk Tot'l Ret'n
iPath Dow Jones-UBS Natural Gas Subindex Total Return ETN (GAZ) E- ETN -7.57%
United States Natural Gas Fund LP (UNG) E- ETF -5.53%
Market Vectors - Solar Energy ETF (KWT) E ETF -4.93%
Claymore/MAC Global Solar Energy Index ETF (TAN) E ETF -4.05%
ELEMENTS Linked to the CS Global Warming Index (GWO) C ETN -3.80%
Guinness Atkinson Funds - Alternative Energy Fund (GAAEX) E- Open-End -2.92%
Rydex Inverse 2X S&P Select Sector Energy ETF (REC) E- ETF -2.60%
Direxion Daily Energy Bear 3X Shares (ERY) U ETF -2.59%
ProShares Ultra DJ-AIG Crude Oil (UCO) U ETF -2.50%
iShares S&P Global Clean Energy Index Fund (ICLN) E ETF -2.44%
Source: Bloomberg & Ratings

For the week ending Thursday, Aug. 13, the average energy sector fund inched up 1.1%, excluding inverse funds.

Some of the best performers were closed-end funds specializing in master limited partnerships, or MLPs, which collect oil and gas pipeline and other energy royalties. Most of the 7% increase in the value of the Tortoise North American Energy ( TYN) closed-end fund wasn't associated with its holdings but rather with shrinkage in the discount at which the fund trades in comparison to its net asset value.

The second-best-performing energy fund is one of two that hoards coal stocks. The PowerShares Global Coal Portfolio ( PKOL) added 6.4% for the five trading days under review. With half of U.S. electricity generation coming from the burning of coal, the expected economic recovery can only be good for coal stocks.

Double-digit gainers include 16% in Alpha Natural Resources ( ANR), 13% in Patriot Coal ( PCX) and 12% in Consol Energy ( CNX).

Unlike natural gas, coal is easy to transport. Consol Energy reported the sale of 88,000 tons of U.S. mined steel-making coal to a buyer in China. As China continues its economic stimulus and imports more coal, demand for this fuel and the companies that mine it may allow investors who get in early to clean up.
Best-Performing Energy Funds for the Week Ending Aug. 13
Fund (Ticker) Rating Fund Type 1 Wk Tot'l Ret'n
Tortoise North American Energy Corp (TYN) C Closed-End 6.96%
PowerShares Global Coal Portfolio (PKOL) U ETF 6.37%
Cushing MLP Total Return Fund (SRV) C- Closed-End 5.25%
Fiduciary/Claymore MLP Opportunity Fund (FMO) C Closed-End 5.19%
Profunds Oil Equiptment Distribution & Services UltraSector (OEPIX) U Open-End 4.88%
Market Vectors - Coal ETF (KOL) C+ ETF 4.88%
Market Vectors - Environmental Services ETF (EVX) D ETF 4.67%
Tortoise Energy Capital Corp (TYY) C+ Closed-End 4.07%
ProFunds Basic Materials UltraSector ProFund (BMPIX) E- Open-End 4.07%
First Trust ISE-Revere Natural Gas Index Fund (FCG) D- ETF 3.68%
Source: Bloomberg & Ratings
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.