Of Cargo Ships and ETFs

Some exchange traded funds (ETFs) could be affected as the world’s fleet of cargo ships grow old. That’s because as the world’s fleet of cargo ships age, they can’t carry the surging demand for commodities. In turn, this affects supply and causes the cost of shipping and commodity prices to go up, reports Jesse Emspak for Investor’s Business Daily. Some of the ETFs that could be impacted by this and their year-to-date performance include:

• Market Vector’s Steel (SLX) – up 79.8%
• iShares Dow Jones U.S. Oil Equipment (IEZ) – up 40.4%
• iShares S&P Global Materials Sector Index Fund (MXI) – up 41.1%
• WisdomTree Basic Materials (DBN) – up 38.1%

Shipping costs are measured by the Baltic Exchange Dry Index, an indicator of prices for transporting weight. The index is up 145% year-to-date and 171% over the past year. Because the commodities need to be physically transported, commodity prices tend to move with the Baltic Exchange Dry Index. Currently there are not any dry shipping related ETFs, but ETFs that track commodities could rise with this mix, such as:

• streetTracks Gold Shares (GLD) – up 19.6% year-to-date
• Market Vector’s Gold Miners (GDX) – up 16.8% year-to-date