One of the main drivers of XTN’s stellar 2014 performance has been its almost 24% weight to airline stocks. That is well ahead of of the 15.8% IYT allocates to airlines, giving XTN room to capitalize with investors looking for airline exposure via ETFs at a time when no airline-specific ETF exists. [Transport Funds Benefit From Lack of Airline ETFs]
Said another way, XTN is an ideal play for the investor looking for a way to profit from lower oil prices without having to short an oil ETF or establish a long position in a volatile inverse or leveraged oil fund. Over the past 90 days, XTN has jumped 15.6% while the United States Oil Fund (NYSEArca: USO) is lower by 41.5%.
Airlines that cut their oil hedges this year are benefiting from falling prices. Jet fuel represents the single largest variable cost in the airline industry. With Saudi Arabia signaling it has no intent to cut production and the U.S. economy continuing to improve, those factors combined with a strong dollar could facilitate further gains for XTN in 2015. As it is, XTN hit an all-time high on Friday and now resides 16.3% above its 200-day moving average.
SPDR S&P Transportation ETF
