ETF Trends
ETF Trends

Transportation sector exchange traded funds plowed through crippling winter conditions, outperforming the broader stock market so far this year.

The iShares Transportation Average ETF (NYSEArca: IYT) has gained 2.1% year-to-date while the SPDR S&P Transportation ETF (NYSEArca: XTN) rose 5.5%. In comparison, the S&P 500 Index is up 1.5%.

Last week, the American Trucking Association revealed that the For-Hire Truck Tonnage Index increased 2.8% in February, after declining 4.5% the previous month.

“It is pretty clear that winter weather had a negative impact on truck tonnage during February,” ATA Chief Economist Bob Costello, said in the report. “However, the impact wasn’t as bad as in January because of the backlog in freight due to the number of storms that hit over the January and February period.”

The markets feared that the back-to-back winter storms would slow transportation, commerce and the overall economy.

“The fundamentals for truck freight continue to look good,” Costello added. “Several other economic indicators also snapped back in February. We have a hole to dig out of from such a bad January, but I feel like we are moving in the right direction again. I remain optimistic for 2014.”

The SPDR S&P Transportation ETF has a heavy 36.4% allocation toward the trucking sub-sector while the iShares Transportation Average ETF includes a 16% weight toward trucking.

Airline stocks are also beginning to take off after years of competitive pricing, higher oil prices and labor disputes thinned out the market. Now, airline investors are pointing to the reduced competition, improved management and steady energy prices as supporting factors that could lead to higher profits, reports Matt Jarzemsky for the Wall Street Journal.

“This is the first time I’ve been—broadly based—very bullish on the industry,” Eli Salzmann, a manager at Neuberger Berman, said in the article.

While there are no longer any airline specific ETFs, investors can still find significant exposure to the sub-sector through transportation ETFs. IYT has a 14.2% weight toward airline companies and XTN includes 24.4% in airline stocks.

iShares Transportation Average ETF

For more information on the transportation sub-sector, visit our transportation category.