Launched on 10/06/2003, the iShares U.S. Transportation ETF (IYT) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Transportation/Shipping segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many 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 2, placing it in top 13%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $838.65 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.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.41%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. 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, Union Pacific Corp (UNP) accounts for about 19.27% of total assets, followed by United Parcel Service Inc Class B (UPS) and Csx Corp (CSX).
The top 10 holdings account for about 75.04% of total assets under management.
Performance and Risk
So far this year, IYT has lost about -18.33%, and is down about -11.94% in the last one year (as of 07/22/2022). During this past 52-week period, the fund has traded between $207.48 and $279.97.
The ETF has a beta of 1.18 and standard deviation of 28.85% 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.