Should You Invest in the iShares U.S. Transportation ETF (IYT)?
Designed to provide broad exposure to the Industrials - Transportation/Shipping segment of the equity market, the iShares U.S. Transportation ETF (IYT) is a passively managed exchange traded fund launched on 10/06/2003.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Transportation/Shipping is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
The fund is sponsored by Blackrock. It has amassed assets over $778.03 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Transportation/Shipping segment of the equity market. IYT seeks to match the performance of the Dow Jones Transportation Average Index before fees and expenses.
The S&P Transportation Select Industry FMC Capped Index (USD) measures the performance of companies from the Industrial Transportation, Airline and General Industrial Services industries of the U.S. equity market.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.39%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.43%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector--about 100% of the portfolio.
Looking at individual holdings, United Parcel Service Inc Class B (UPS) accounts for about 18.70% of total assets, followed by Union Pacific Corp (UNP) and Csx Corp (CSX).
The top 10 holdings account for about 71.89% of total assets under management.
Performance and Risk
So far this year, IYT has gained about 1.58%, and is down about -17.95% in the last one year (as of 03/27/2023). During this past 52-week period, the fund has traded between $196.56 and $276.16.
The ETF has a beta of 1.20 and standard deviation of 26.13% for the trailing three-year period, making it a high risk choice in the space. With about 53 holdings, it effectively diversifies company-specific risk.
IShares U.S. Transportation ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IYT is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
SPDR S&P Transportation ETF (XTN) tracks S&P Transportation Select Industry Index and the U.S. Global Jets ETF (JETS) tracks U.S. Global Jets Index. SPDR S&P Transportation ETF has $224.16 million in assets, U.S. Global Jets ETF has $1.72 billion. XTN has an expense ratio of 0.35% and JETS charges 0.60%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares U.S. Transportation ETF (IYT): ETF Research Reports
CSX Corporation (CSX) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
U.S. Global Jets ETF (JETS): ETF Research Reports
SPDR S&P Transportation ETF (XTN): ETF Research Reports
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