Transportation exchange-traded funds (ETFs) give investors exposure to a basket of stocks belonging to a broad range of companies in the transportation sector. The sector is comprised of companies that build transportation infrastructure, manufacture vehicles or other equipment, and provide services. This includes airlines, railroads, trucking, and logistics companies. Some notable companies include Delta Air Lines Inc. (DAL), CSX Corp. (CSX), and General Motors Co. (GM). Since the transport of goods and people fluctuates with the the economy, increasing when the economy grows and decreasing when it slows, transportation ETFs hold a large number of cyclical stocks.
The transportation ETF universe is comprised of 2 ETFs, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). The best-performing transportation ETF for Q3 2020, based on performance over the past year, is the SPDR S&P Transportation ETF (XTN). We examine the 2 transportation ETFs below. Both of them have negative total returns for the past year, which have been aggravated by the COVID-19 pandemic. All numbers in this story are as of May 11, 2020.
- Performance Over 1-Year: -20.6%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 1.72%
- 3-Month Average Daily Volume: 49,369
- Assets Under Management: $121.0 million
- Inception Date: January 26, 2011
- Issuing Company: State Street SPDR
XTN is a multi-cap ETF that invests in U.S. transportation stocks of various market capitalizations. The fund tracks the S&P Transportation Select Industry Index and follows a blended strategy that invests in growth and value stocks. This ETF has significant small cap exposure, which means it may be more volatile than a typical ETF holding large stocks. The ETF’s top three holdings include Old Dominion Freight Line Inc. (ODFL), a less than truckload (LTL) freight shipping company; Atlas Air Worldwide Holdings Inc. (AAWW), the holding company providing aircraft, crew, and maintenance to major airlines; and Uber Technologies Inc. (UBER), the ride-hailing and food-delivery services company.
- Performance Over 1-Year: -21.6%
- Expense Ratio: 0.42%
- Annual Dividend Yield: 1.94%
- 3-Month Average Daily Volume: 245,914
- Assets Under Management: $457.8 million
- Inception Date: October 10, 2003
- Issuing Company: iShares
IYT is a multi-cap ETF focused on U.S. transportation equities across the market-cap spectrum. The fund tracks the Dow Jones Transportation Average Index and follows a blended strategy, investing in both growth and value stocks. This fund focuses on transport stocks directly serving businesses rather than consumers and exposes investors to multiple tiers of the economy. IYT focuses many of its holdings on the railroad and trucking industries. The ETF’s top three holdings include Norfolk Southern Corp. (NSC), Union Pacific Corp. (UNP), and Kansas City Southern (KSU), all of which are railroad companies.