Green Transit ETF May Motor in Bull Market

Even though the Global Progressive Transportation ETF invests in a subset of industrial companies, it has outperformed funds that invest more broadly in the sector. The fund has lost 12% since it hit the market in September, dropping less than the Industrial Select Sector SPDR ETF and the iShares Dow Jones Transportation Average Index Fund(IYT). These funds invest in larger companies and have lost more than 30% of their value during that time.

Industrial companies make up 73% of the PowerShares fund while consumer discretionary stocks account for another 12%. Geographically, 37% of the ETF is invested in American companies.

The PowerShares fund differs from the more popular Industrial Select Sector SPDR in several ways. Two-thirds of the PowerShares fund is invested abroad, while the SPDR ETF is entirely domestic. The average market cap of companies in the PowerShares fund is $6.8 billion versus $36 billion for the SPDR fund. The PowerShares fund owns specialized companies and the SPDR holds large conglomerates like General Electric(GE), United Technologies(UTX) and 3M(MMM).

The fund's three biggest holdings are battery companies. China's BYD Co.(BYDDF) accounts for 5.7% of the ETF's assets. Ener1(HEV) and Japan's GS Yuasa(GYUAF) make up another 5.3% and 4.8%, respectively. Further down the list are railway companies, truckers and shippers.

This article isn't about buying the Global Progressive Transportation ETF. It's about taking advantage of investment products available to manage the volatility of a diversified portfolio.

>To order reprints of this article, click here: Reprints