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A Global Transport ETF Strategy

by: Mike Havrilla August 10, 2008 | about stocks: AMR / BNI / CAL / FDX / IYT / JBLU / LUV / OSG / UNP / UPS    

Mike Havrilla

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Investors are currently limited to the iShares Dow Jones Transports (IYT) as a transport ETF option with net assets of $698 million and 20 component stocks (stats as of 8/8/08 from the iShares website). The top five holdings account for 43.2% of invested assets and include the following: Burlington Northern Santa Fe (BNI, 10.7%), Union Pacific (UNP, 9.6%), FedEx (FDX, 9.1%), Overseas Shipholding Group (OSG, 6.9%), and United Parcel (UPS, 6.9%).

In addition, the iShares Dow Transports ETF also includes three passenger airlines: AMR Corp. (AMR), Continental (CAL), and JetBlue (JBLU); although the combined weighting for these three companies is negligible; they represent an opportunity cost by occupying three positions in the fund and omit industry leader Southwest Airlines (LUV).

As evidence of increased commercial interest and product development of globally-focused transport ETFs among major ETF providers, the following ideas have recently been filed with the SEC: Claymore/Delta Global Shipping, PowerShares Global Transportation, and SPDR Transportation.

My strategy for a family of four global transport ETFs is outlined below with links provided to more details on the component index for each segment:

1) Global Logistics PerformIdex - composite (30 stocks) blend of rails (8), maritime (8) , trucking (8), and air freight/delivery (6)

2) Global Railroad BULLISHares - long rail transport

3) Global Maritime BULLISHares - long waterway transport

4) Global Airline BEARISHares - short passenger airlines

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This article has 4 comments:

  •  
    Aug 11 11:55 AM
    Just checked the Ishares website and IYT does include LUV. Please explain.
    Reply
  •  
    Aug 11 12:53 PM
    IYT now has 4 airlines out of 20 total stocks, which is worse than previous total of 3 airline holdings
    Reply
  •  
    Aug 12 05:11 PM
    I like your "strategy" ideas, but that doesn't do us much good without a an actual product to invest in. How about a preview of the three ETFs that are in registration?
    Reply
  •  
    Aug 13 11:08 AM
    See my blog post on this at:
    mikehav.blogspot.com/2...
    Reply
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