As the global economy picks up, you should be very interested in shipping exchange traded funds (ETFs). Why? Because one, shipping and global trade go hand-in-hand, and two, diversifying across the sector through an ETF should help you sleep at night, especially as the European credit crisis remains uncertain.
Until the shipping ETF came along, investors did not have a good choice for investing in a shipping fund. The only available options were the iShares Dow Jones Transportation Average Index Fund (IYT) or the Fidelity Select Transportation Fund (FSRFX), reports Don Dion of the Street. However, within these funds, the shipping industry only accounts for 9% and 0.3%, respectively.
The Claymore Shipping ETF (NYSEArca: SEA), which was resurrected on June 11 after being forced to close in April due to a legal mishap, finally came along to give pure exposure to this sector. The mishap occurred because not enough shareholders approved a new investor advisory agreement after Guggenheim Partners purchased Claymore in late 2009. [Claymore’s SEA Is Back!]
The resurrected fund tracks the same index as its predecessor- the Delta Global Shipping Index. Its top holdings are: Pacific Basin Shipping, Overseas Shipholding, Navios Maritime Partners and Ship Finance International.
Although investors may want to be as far away as possible from any equities related to Greece, SEA has no choice but to be invested heavily in them. This is because the Greek Merchant Marine is the largest merchant fleet in the world. Currently, Greece accounts for 18.5% of the fund. [ETFs to Watch in a Recovery.]