Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
IShares Transportation Average ETF IYT offers concentrated exposure to the United States transportation industry. Its narrow focus makes it best suited as a complementary satellite holding in a diversified portfolio.
IYT   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 385,000 shares traded each day.
Transportation companies are well-positioned to continue benefiting from increased demand as the recovery continues.
About 67% of the assets that this ETF invests are in companies with economic moats, which Morningstar's equity analysts define as sustainable competitive advantages. Read more 

Bear Case

If the economy takes a turn downward, this fund likely would feel pain.
Railroads, which make up 24% of this ETF, face the risk of reregulation on several fronts.
If fuel prices remain low for a long enough period of time, the rail firms in this ETF could lose business to trucking firms. Read more 

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