Transportation ETFs: Why They Matter
December 3rd 2009 at 2:00pm by Tom Lydon
The transportation sector is an indicator of our economic health. This means that as the United States and others rebuilt, this sector’s exchange traded funds (ETFs) could have a nice boost in store.
Industries that make up the transportation sector include airlines, railways, package carriers, even oil and gas pipelines. Transportation is actually the most important sector we have, says David Fessler for Investment U. Why? Growth or contraction here serves as a proxy for both U.S. and global economic growth. (Why transportation is an “it” sector for the recovery). Transportation accounts for 3% of national GDP.
Warren Buffett seems to agree: the rail sector is one on which he’s bullish. (How to play what Buffett is buying).
The industry is highly correlated to consumers: as they buy more, there’s a need to transport more.
Changes are taking place, though:
- Intermodal shipping, which combines highways and rails, has become popular because it reduces fuel costs. Intermodal volumes have been flat, to slightly up, since June.
- Domestic container volumes are up slightly, by 1.3% in the third quarter. (Has the transportation sector hit bottom?)
For more storeis about transportation, visit our transportation category.
- iShares Dow Jones Transportation Sector (NYSEArca: IYT): up 16.7% year-to-date
- Claymore/NYSEArca Airline (NYSEArca: FAA): up 21% in the last three months
- Claymore Delta Global Shipping (NYSEArca: SEA): up 32% year-to-date
- PowerShares Global Progressive Transport (NASDAQ: PTRP): up 48.9% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.