Back to top

Image: Bigstock

Should You Invest in the SPDR S&P Transportation ETF (XTN)?

Read MoreHide Full Article

Looking for broad exposure to the Industrials - Transportation/Shipping segment of the equity market? You should consider the SPDR S&P Transportation ETF (XTN - Free Report) , a passively managed exchange traded fund launched on 01/26/2011.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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 2, placing it in top 13%.

Index Details

The fund is sponsored by State Street Global Advisors. It has amassed assets over $457.68 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Transportation/Shipping segment of the equity market. XTN seeks to match the performance of the S&P Transportation Select Industry Index before fees and expenses.

The S&P Transportation Select Industry Index represents the transportation segment of the S&P Total Market Index.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.86%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Fedex Corporation (FDX - Free Report) accounts for about 2.59% of total assets, followed by Hertz Global Holdings Inc (HTZ - Free Report) and Old Dominion Freight Line Inc. (ODFL - Free Report) .

The top 10 holdings account for about 23.26% of total assets under management.

Performance and Risk

The ETF has lost about -23.77% so far this year and is down about -16.34% in the last one year (as of 09/07/2022). In that past 52-week period, it has traded between $66.98 and $98.74.

The ETF has a beta of 1.30 and standard deviation of 31.69% for the trailing three-year period, making it a high risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P 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, XTN 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.

IShares U.S. Transportation ETF (IYT - Free Report) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS - Free Report) tracks U.S. Global Jets Index. IShares U.S. Transportation ETF has $798.77 million in assets, U.S. Global Jets ETF has $2.43 billion. IYT has an expense ratio of 0.41% and JETS charges 0.60%.

Bottom Line

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.

Published in