Given that the political turmoil in the Middle East may threaten global energy supplies, is Russia an attractive energy play?–Jim Brewster, Milwaukee, Wis.

As long as you can embrace risk, Russia is an attractive investment destination for several reasons.

It’s well known that the country boasts a massive store of hydrocarbons.  Russia’s top three exports are petroleum, petroleum products and natural gas, and its recoverable petroleum reserves are estimated to be between 150 billion and 200 billion barrels.  Over the past several years, Russian oil producers have seen output fall due to maturing fields.  However, these firms have invested heavily to boost production.  Regardless of what ultimately transpires in the Middle East, Russia will benefit if oil prices remain elevated.

The Russian government is eager to build an economy that doesn’t rely solely on the country’s treasure trove of energy resources.  Consequently, the government has invested heavily in needed infrastructure and is developing a technology corridor akin to Silicon Valley.  Additionally, the Russian currency, the ruble, has strengthened as monetary authorities have tightened interest rates.  This provides US-based investors with a currency tailwind.

Of course, investing in Russia entails a good measure of political risk, particularly as it relates to the country’s energy assets.  Russia’s leadership has demonstrated that it will use its energy assets to achieve political ends, which can create uncertainty in the markets.

But if you can stomach the risk, an investment in Russia could be profitable over the long term.

I’ve been closely monitoring the situation with the troubled [Fukushima Daiichi] nuclear reactor in Japan. I believe the crisis will hurt the global nuclear power industry. How should I position myself? –anonymous

If you believe that the Japanese nuclear crisis will stall the budding nuclear renaissance, it may be time to go back to basics. Turn to the traditional fuels used for electricity generation. Coal is cheap and abundant and already generates more than 40 percent of global baseline electricity. Given coal’s low price, it would be an intermediate-term beneficiary of a shift away from nuclear power.

One of our favorite ways to play coal is an exchange-traded fund (ETF), Market Vectors Coal (NYSE: KOL). Rather than building its portfolio on futures, the ETF holds a variety of pure play miners and well as equipment manufacturers that generate at least half of their revenue from coal. The fund is a more derivative play on the coal market, but it captures much of coal’s upside. Market Vectors Coal also avoids the potential tax complications of futures-based funds that are prone to generating unwanted capital gains.

But increased reliance on coal is a stopgap measure.  We respect that some may question the science behind climate change.  But investors must recognize the larger trend: Global governments have committed to reducing greenhouse gas emissions.  Europe is already famously devoted to alternative energy.  President Obama has set a goal to generate 25 percent of US energy from alternative energy sources.  China is determined to corner the green energy market.  Alternative energy is here to stay.  The real question is how long it will take for these technologies to become economical relative to other energy sources.

PowerShares Global Clean Energy Portfolio (NYSE: PBD) offers broadly diversified exposure to solar, wind and geothermal energy generators. With an expense ratio of 0.75 percent, it is an excellent long-term holding that’s cheap enough to hold while these technologies develop.

What risks do I face if an ETF closes down? –via email

Often an ETF will fold if it fails to pull in enough assets to make running the fund profitable for the issuer. Competition in the ETF market is fierce and many outfits have launched funds that compete head to head with existing products on the market. It’s difficult to overcome that first-mover advantage.

Issuers also launch esoteric offerings that fail to garner much attention from investors. However, for many issuers, these exotic funds may still be worth the risk. Given the relatively low expenses of launching a new ETF, particularly for large firms that enjoy economies of scale, issuers can afford to take the chance. A good rule of thumb is to stick with those ETFs that have at least $25 million in assets. That’s typically the breakeven point for ETF issuers.

Nevertheless, there will be occasions where you might hold shares of an ETF that is preparing to shut down. What should investors do in this scenario? More often than not, it pays to sit tight.

When an ETF folds, the fund’s underlying holdings are sold and the cash is distributed to investors. Although there are costs associated with liquidating an ETF, the issuer generally covers those costs. Investors should receive the net asset value of their shares based upon their value the day the liquidation is executed. In reality, investors don’t lose money. Liquidation is generally handled in such a way that the value of the fund’s underlying securities will not be affected by the selling activity. Additionally, if the fund is focused on liquid securities, it probably didn’t hold enough of these securities to affect their value.

The worst consequences when an ETF shuts down are usually an unanticipated tax bill and an extra commission fee. When you receive the cash distribution from the liquidation, Uncle Sam takes his cut of any gains. And you’ll have to redeploy those assets, resulting in another fee from your broker. But aside from that small haircut, there’s no reason to panic when an ETF folds.