As economies around the world start to rebuild, the International Monetary Fund (IMF) has anticipated that the global economy will expand by 2.5% in 2010, which will likely be beneficial to the transportation sector.
Transportation as a whole is a barometer of economic activity and generally moves in tandem with the overall economy. As economies expand, they demand more goods, which require transportation. In fact, the Baltic Dry Index (BDI), which is a measure of worldwide international shipping prices of various dry bulk, has been creeping upward over the past few months.
This indirect measure of the global supply and demand for commodities is of importance because it is an efficient indicator of future economic growth and production. Generally, as the BDI increases, demand for dry bulk, which includes such things as food, grains, coal, steel and building materials is outpacing supply.
As these supply and demand forces continue to deviate from an equilibrium price, more goods will be transported around the world resulting in an uptick in the transportation sector. Some ETFs to consider include the following:
- PowerShares Global Progressive Transportation Portfolio (PTRP), which carries an expense ratio of 0.75%. PTRP holds 36 stocks and focuses on businesses which seek to utilize cleaner, less costly and more efficient forms of transportation.
- Claymore/Delta Global Shipping (SEA), which carries an expense ratio of 0.65% and holds 30 companies in the shipping business.
- iShares Dow Jones Transportation Average (IYT), which carries an expense ratio of 0.47% and holds 20 companies including railways, freight carriers, airlines and package carriers.
