The Transportation Exchange Traded Fund (ETF) provides investors with exposure to a package of stocks belonging to various companies in the transportation industry. This sector consists of companies that build infrastructure, manufacture vehicles or other equipment, and provide services to the industry. This includes airlines, railroads, trucking and logistics companies. Some well-known companies in this field include Delta Air Lines (DAL), CSX Corporation (CSX), and General Motors (GM).
- In the past year, the transportation sector performed better than the broader market.
- The transport exchange-traded funds (ETF) with the best one-year tracking total return are XTN, FTXR and HAIL.
- The largest holdings of these ETFs are Matson Inc., Expeditors International of Washington Inc. and Veoneer Inc. respectively.
Transportation ETFs hold a large number of cyclical stocks because the transportation of goods and people fluctuates with economic fluctuations, increasing when the economy grows, and decreasing when the economy slows. These stocks outperformed the broader market, with the benchmark S&P 500 Transportation (Industry Group) Index’s one-year tracked total return rate of 41.8%, while the S&P 500 Index was 33.6%.
In 2021, transportation will benefit from the reopening of the economy, the passage of the infrastructure bill by the US Congress, and the electric vehicle (EV) trend.
On November 15, 2021, President Biden signed the Infrastructure Investment and Employment Act. The law allocates US$550 billion to improve roads, bridges, water structures, resilience, and the Internet in the United States. The legislation will spend US$11 billion on transportation safety programs, US$39 billion on improving public transportation, US$66 billion on improving passenger and freight railways, US$17 billion on improving ports, and US$25 billion on improving airports, and More used in other areas of the transportation sector.
The transportation ETF field consists of six such ETFs traded in the United States, excluding inverse and leveraged funds and funds with assets under management (AUM) of less than US$50 million. Based on the performance of the past year, the best transportation ETF is SPDR S&P Transportation ETF (XTN).
Below, we will look at the top 3 traffic ETFs measured by tracking total returns for a year. Performance data is as of December 1, 2021.
SPDR Standard & Poor’s Transportation ETF (XTN)
- One-year tracking total return: 31.37%
- Expense rate: 0.35%
- Annual dividend yield: 1.08%
- Three-month average daily volume: 125,545
- Assets under management: US$935.3 million
- Date of establishment: January 26, 2011
- Issuing company: State Street Global Advisors
XTN is a multi-share hybrid fund that attempts to track the Standard & Poor’s Transportation Select Industry Index. The index tracks the stocks of the transportation sector in the Standard & Poor’s Total Market Index, including industries such as air cargo and logistics, airlines, airport services, road and rail tracks, shipping, seaports and services, rail and truck transportation.
In XTN’s portfolio, freight companies received the highest allocation, followed by airlines and air logistics. XTN’s largest holdings include Matson Inc. (MATX), an ocean shipping service company; AMERCO (UHAL), the parent company of moving and self-storage company U-Haul; and Saia Inc. (SAIA), a freight and logistics company.
First Trust Nasdaq Transportation ETF (FTXR)
- One-year tracking total return: 32.0%
- Expense rate: 0.60%
- Annual dividend yield: 0.57%
- Three-month average daily volume: 69,245
- Assets under management: US$1.24 billion
- Date of Establishment: September 20, 2016
- Issuing company: First Trust
FTXR is a multi-share fund that uses a mixed strategy to invest in value and growth stocks. The fund tracks the Nasdaq US Intelligent Transportation Index, which is composed of the 30 most liquid transportation securities from the Nasdaq US benchmark index. These securities are then ranked and weighted based on volatility, value, and growth.Trucking, railways and aviation are currently the most weighted.
FTXR’s largest holdings include Washington Corporation’s Expeditors International (EXPD), a logistics and freight forwarding company; Blink Charging Co. (BLNK), a supplier of electric vehicle charging stations; and CSX Corp. (CSX), a subsidiary A holding company that provides rail transportation services.
SPDR S&P Kensho Smart Mobility ETF (HAIL)
- One-year tracking total return: 29.01%
- Expense rate: 0.45%
- Annual dividend yield: 0.93%
- Three-month average daily volume: 94,422
- Assets under management: US$19604 million
- Date of Establishment: December 26, 2017
- Issuing company: State Street Global Advisors
HAIL is a multi-share fund targeting the Standard & Poor’s Kensho Intelligent Transportation Index. The index is composed of U.S.-listed companies involved in the development of autonomous driving and electric vehicle technologies, as well as commercial and civilian drones and other advanced transportation systems.
HAIL has a diversified investment portfolio covering a wide range of industries. Automakers, auto parts and equipment account for more than one-third of its assets.
HAIL’s largest holdings include Veoneer Inc. (VNE), a US-Swedish automotive technology company; Aspen Aerogels Inc. (ASPN), a manufacturer of aerogel insulation materials mainly used in the energy sector; and location-based software and GSP solutions Provider Trimble Inc. (TRMB).
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