An ETF for the Movement of Stuff
08/26/08 - 01:11 PM EDT
Roger Nusbaum
Shipping stocks are a wildly volatile group as they seem to feel every bump in the movement of the Baltic Dry index, which after being a one-way trade for a couple of years has endured some nasty corrections in the last year.
The segment's volatility is neither good or bad. Shipping stocks can be thought of as a play on facilitating the movement of goods and commodities, among other things, which have contributed to the improving quality of life in many countries around the planet. If you think the movement of stuff is likely to be an important global theme then the new Claymore/Delta Global Shipping Index ETF(SEA Quote - Cramer on SEA - Stock Picks) allows access without the single stock risk. The accompanying year-to-date chart shows the four largest holdings in the fund as of Aug. 25: Euroseas Limited (ESEA Quote - Cramer on ESEA - Stock Picks), Seaspan(SSW Quote - Cramer on SSW - Stock Picks), Diana Shipping(DSX Quote - Cramer on DSX - Stock Picks) , and DHT Maritime (DHT Quote - Cramer on DHT - Stock Picks). The four stocks have standard deviations ranging from the low 30s to the low 50s compared with 23% for the index. While that is lower than the individual stocks, as you might expect, the volatility for the MSCI World Index (the benchmark used in the comparison by Delta Global) was 10.05%. SEA should be expected to be plenty volatile but less so than owning an individual stock in the space. If you're somewhat familiar with the group it won't be a surprise that Greece has the largest country weighting at 35.3%, followed by the U.S at 19.1%, and Bermuda at 15.4%. Some nuts and bolts of the ETF include a fee capped at 0.65%, and a weighted average market cap of $2.9 billion (not a surprise the fund would lean smaller). The ETF also stands to have a very high dividend yield.
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