iShares Dow Jones Transportation AverageIYT

Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough

Suitability
Investors seeking exposure to the U.S. transportation industry can consider iShares Dow Jones Transportation Average Index IYT. Because this exchange-traded fund is a concentrated bet on a very narrow market segment, we Read more

Bull Case

IYT is the cheapest option for exposure to the transportation subsector of the industrials industry. This ETF also is fairly liquid, with an average of 491,000 shares traded each day.

Transportation companies are well positioned to continue benefiting from increased demand as the recovery continues.

About 69% of the assets that this ETF invests in are in companies with economic moats, which Morningstar's equity analysts define as having sustainable competitive advantages. Read more

Bear Case

Increasing economic uncertainty could weigh on the performance of this fund.

Railroads, which make up 30% of this ETF, face the risk of reregulation on several fronts.

Higher fuel costs are a major risk for all transportation companies. While some fuel surcharges have been shown to stick, transportation firms aren’t always able to pass along all such charges to shippers. Read more