You can invest in companies that move people and products by buying shares of exchange-traded funds (ETFs) that specialize in the transportation sector. The transportation sector is one of the most broadly diversified with industrial companies representing airlines, railroads, truckers, equipment and leasing stocks, and logistics companies.

In the current environment, these companies have been facing some challenges. Natural disaster effects, specifically from hurricanes, have slowed sales and revenue across the sector. Oil prices have also been a factor as oil trends higher, with Brent crude oil future moving above two-year highs in the $60 per barrel range. Higher oil prices result in higher fuel prices which is a significant expense for the sector. (See also: What Determines Oil Prices?). While the sector is facing some current challenges, positive GDP growth is also influencing valuation prospects.

ETFs offer some protection because they are invested in a variety of companies. Given the broad ranging factors affecting the industry, ETFs may specifically be a prudent investment for investors seeking transportation exposure. We have selected three of the top performing ETFs in the transportation sector through November 26, 2017.

1. Direxion Daily Transportation Bull 3X Shares ETF (TPOR)

The Direxion Daily Transportation Bull 3X Shares ETF seeks to return three times the investment results of the Dow Jones Transportation Average Index. It is managed by Direxion Investments and utilizes an index fund replication approach. The Dow Jones Transportation Average Index includes 20 transportation companies from across the sector with road and rail accounting for the majority of the Index at 46%. The Fund uses leverage to generate excess return.

Net Assets: $2.94 million

Dividend Yield: N/A

YTD Return: 25.10%

Expense Ratio (net): 1.08%

Avg. Volume: 3,002

Inception Date: May 3, 2017

2. SPDR S&P Transportation ETF (XTN)

XTN tracks the S&P Transportation Select Industry Index. The stocks in this index are transportation companies selected from the total U.S. market. The ETF attempts to keep 80% of assets in companies from the Index. Fund managers may invest the remaining 20% of assets in non-transportation companies which helps to diversify the Fund’s holdings.

Avg. Volume: 19,895

Net Assets: $195.17 million

Dividend Yield: 0.64%

YTD Return: 11.15%

Expense Ratio: 0.35%

Inception Date January 26, 2011

3. iShares Transportation Average (IYT)

The Dow Jones Transportation Average Index is over 100 years old and is vital in assessing the market. IYT tracks this index. The ETF contains the largest U.S. transportation companies. Management attempts to place 90% of assets in companies that are part of the benchmark index.

Avg. Volume: 184.493

Net Assets: $825.58 million

Dividend Yield: 0.97%

YTD Return: 8.73%

Expense Ratio (net): 0.44%

Inception Date: October 6, 2003

The Bottom Line

The transportation sector has performed well, with oil prices being depressed; but prices are now starting to rise, which could put some pressure on the sector. Potential for continued growth in GDP and across the industrial sector is also a factor influencing upside potential. The ETFs listed here have a history of strong management and top performance. They can be good choices for navigating the transportation sector going forward. (See also: How To Analyze The Transportation Industry.)

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