We have to venture to the US for an ideal coal ETF, which tells you something about how the investment community views the commodity’s long-term future. The Range COAL ETF is the most purpose-built, holding ~30 companies across both metallurgical and thermal coal, with its top three holdings in Warrior Met Coal (11.3%), Alpha Metallurgical Resources (7.3%), and Yancoal Australia (7.3%). For local investors, it’s important to note that ~38% of the ETF currently holds Australian stocks, questioning whether it’s easier to simply buy a local name (s).
We believe the lack of quality ETF options strengthens the case for owning the stocks directly. For ASX investors, Whitehaven (WHC), Yancoal (YAL) and New Hope (NHC) remain the purest way to gain coal exposure, while ETF alternatives either dilute that exposure or require investing in small, offshore funds.
Despite the global push towards decarbonisation, coal demand continues to surprise on the upside, reaching a record 8.85 billion tonnes in 2025 and still generating around one-third of the world’s electricity. While long-term demand is expected to decline, growth across India and Southeast Asia should provide a solid demand floor for producers such as WHC and NHC for many years to come.
- We like the risk/reward towards the COAL ETF in the current weakness.
