Investors have been flocking to individual stocks like DryShips (DRYS) to capture the upswing of the shipping industry, but the Claymore/Delta Global Shipping Index ETF (SEA) may provide a safer opportunity.
As China's demand for steel continues to soar, investors are starting to move back into shipping. SEA is a good way to invest in this cyclical sector while minimizing the risks that come with picking individual shipping stocks.
SEA tracks the Delta Global Shipping Index, which measures the performance of companies listed on global developed markets within the maritime shipping industry. SEA's portfolio includes dry bulk goods and the leasing and/or operating of tanker ships, container ships, specialty chemical ships and ships that transport liquefied natural gas or dry bulk goods.
The fund's components are based on market capitalization and liquidity, factors that help promote liquidity in the ETF as a whole. SEA includes 30 holdings, with a 58.74% weighting in industrials and a 41.26% weighting in energy. The fund's expense ratio is a reasonable 0.65% considering that the fund is specialized.While dry bulkers, including media favorite DryShips, have been grabbing the headlines lately, it is beneficial to SEA's investors that both dry ships and tankers are included in the underlying basket. The demand for oil tankers tends to be relatively stable, as oil is used for many purposes across the globe. The demand for container ships fluctuates with the economy as consumers spend less money on goods like sneakers. The demand for bulker ships fluctuates even more wildly and depends largely on demand in China and emerging markets in need of goods like steel. SEA includes a variety of shipping companies and ships in its portfolio, helping diversify investors in an inherently volatile industry.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV