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 underperformed the broader market, with the Dow Jones Transportation Average delivering a 1-year trailing total return of 5.0% as compared to 11.1% for the S&P 500.
- The transportation sector underperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are IYT, FTXR, and XTN.
- The top holdings of these ETFs are FedEx Corp., General Motors Co., and Ryder Systems Inc., respectively.
The transportation ETF universe is comprised of 4 ETFs that trade in the U.S., excluding inverse and leveraged funds. The best transportation ETF, based on performance in the past year, is the iShares Transportation Average ETF (IYT). Below, we'll look at the top three transportation ETFs as measured by 1-year trailing total returns. All numbers in this story are as of October 29, 2020, except for the top holdings, which are as of November 10, 2020.
- 1-Year Trailing Total Returns: 5.7%
- Expense Ratio: 0.42%
- Annual Dividend Yield: 1.15%
- 3-Month Average Daily Volume: 263,824
- Assets Under Management: $1.1 billion
- Inception Date: October 10, 2003
- Issuing Company: iShares
IYT is a multi-cap ETF focused on U.S. transportation equities of varying market caps. The fund tracks the Dow Jones Transportation Average Index and focuses on transport companies directly serving businesses rather than consumers, and exposes investors to multiple tiers of the economy. IYT, which holds growth and value stocks, focuses many of its holdings on the railroad and trucking industries. The ETF's top holdings include FedEx Corp. (FDX), a delivery and supply chain management company; Norfolk Southern Corp. (NSC), a railroad company; and Union Pacific Corp. (UNP), also a major railroad operator.
- 1-Year Trailing Total Returns: -0.7%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.57%
- 3-Month Average Daily Volume: 528,723
- Assets Under Management: $630.4 million
- Inception Date: September 21, 2016
- Issuing Company: First Trust
FTXR is a multi-cap ETF focused on the U.S. transportation sector. The fund tracks the Nasdaq U.S. Smart Transportation Index, an index of large-cap industrial stocks that screens by factors such as price appreciation, value and expected volatility. The fund’s largest holdings include General Motors Co. (GM), a multinational car manufacturer; Expeditors International of Washington Inc. (EXPD), an air and ocean freight provider; and CH Robinson Worldwide Inc. (CHRW), a diversified third party logistics company.
- 1-Year Trailing Total Returns: -6.1%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 0.84%
- 3-Month Average Daily Volume: 54,320
- Assets Under Management: $286.0 million
- Inception Date: January 26, 2011
- Issuing Company: State Street SPDR
XTN is a multi-cap ETF that tracks the S&P Transportation Select Industry Index, investing in both 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 holdings include Ryder System, Inc. (R), a supply chain management company; Saia, Inc. (SAIA), a transportation company with a fleet of trucks and delivery terminals; and FedEx.