Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Investors seeking exposure to the U.S. transportation industry can consider iShares Transportation Average ETF IYT. Because this exchange-traded fund is a concentrated bet on a very narrow market segment, we think investors   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 282,000 shares traded each day.
Transportation companies are well positioned to continue benefiting from increased demand as the recovery continues.
About 68.5% of the assets that this ETF invests are in companies with economic moats, which Morningstar's equity analysts define as having 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.
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 

Don't Pay Up to Play REITs 
Watch more 

Premium Membership

View all of our analyst reports with a free trial to Premium.