Transportation exchange-traded funds (ETFs) give investors exposure to a basket of stocks belonging to a broad range of companies in the sector. The transportation sector is comprised of companies that build infrastructure, manufacture vehicles or other equipment, and provide services for the industry. This includes airlines, railroads, trucking, and logistics companies. Some notable companies in this sector include Delta Air Lines Inc. (DAL), CSX Corp. (CSX), and General Motors Co. (GM). Transportation ETFs hold a large number of cyclical stocks because the transport of goods and people fluctuates with the economy, increasing when the economy grows and decreasing when it slows. These funds have significantly outperformed the broader market, with the benchmark S&P 500 Transportation Industry Group Index delivering a 1-year trailing total return of 82.8% compared to 42.0% the S&P 500.
- The transportation sector has risen at nearly double the pace of the broader market over the past year.
- The ETFs with the best 1-year trailing total return are HAIL, FTXR, and JETS.
- The top holdings of these ETFs are Avis Budget Group Inc., Expeditors International of Washington Inc., and American Airlines Group Inc., respectively.
The transportation ETF universe is comprised of 6 ETFs that trade in the U.S., excluding inverse and leveraged funds and those with under $50 million in assets under management (AUM). The best transportation ETF, based on performance in the past year, is the SPDR S&P Kensho Smart Mobility ETF (HAIL). Below, we'll look at the top three transportation ETFs as measured by 1-year trailing total returns. The performance figures above are as of May 18, while all other numbers in this story are as of May 19, 2021.
- 1-Year Trailing Total Returns: 130.2%
- Expense Ratio: 0.45%
- Annual Dividend Yield: 0.68%
- 3-Month Average Daily Volume: 88,617
- Assets Under Management: $224.4 million
- Inception Date: Dec. 26, 2017
- Issuing Company: State Street
HAIL is a multi-cap fund that targets the S&P Kensho Smart Transportation Index. The index comprises U.S.-listed companies that are involved in the development of autonomous and electric vehicle technology as well as commercial and civilian drones and other advanced transportation systems. HAIL holds a diverse portfolio spread across a broad range of industries. Auto parts and equipment, and automobile manufacturers account for roughly a third of assets. The fund's top holdings include Avis Budget Group Inc. (CAR), a car rental company; Textron Inc. (TXT), a maker of airplanes, helicopters, weapons systems, and related products; and Dana Inc. (DAN), a supplier of automotive equipment including axles, driveshafts, and transmissions.
- 1-Year Trailing Total Returns: 101.6%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.17%
- 3-Month Average Daily Volume: 130,156
- Assets Under Management: $1.1 billion
- Inception Date: Sep. 20, 2016
- Issuing Company: First Trust
FTXR is a multi-cap fund which utilizes a blended strategy, investing in both value and growth stocks. The fund targets the Nasdaq US Smart Transportation Index, which is comprised of the 30 most liquid transportation securities from the NASDAQ US Benchmark Index. These securities are then ranked and weighted according to volatility, value, and growth. The trucking, railroads, and transportation services industries are currently the most heavily weighted. FTXR's top holdings include Expeditors International of Washington Inc. (EXPD), a logistics and freight forwarding company; C.H. Robinson Worldwide Inc. (CHRW), a multi-modal transportation services a third-party logistics provider; and PACCAR Inc (PCAR), a manufacturer of trucks.
- 1-Year Trailing Total Returns: 98.9%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.03%
- 3-Month Average Daily Volume: 6,229,759
- Assets Under Management: $3.9 billion
- Inception Date: April 28, 2015
- Issuing Company: U.S. Global Investors
JETS, the only pure play airline ETF, targets the U.S. Global Jets Index. About 80% of the index's components are domestic airlines and companies involved in the aviation industry, and 20% are international companies. JETS is a blended, multi-cap ETF, although it is weighted predominantly toward large-cap companies. The fund's portfolio is heavily weighted toward a small number of major U.S. airline companies. The top holdings of JETS include American Airlines Group Inc. (AAL), a domestic and international carrier; Southwest Airlines Co. (LUV), a low-cost carrier; and United Airlines Holdings Inc. (UAL), a domestic and international carrier.
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