Investors Roll Out of Transport ETF

Investors cleared out of the iShares DJ Transportation Average Fund in a big way Tuesday.

Author:: Gary Gordon
Publish date:: Mar 24, 2010 11:13 AM EDT

By Gary Gordon of etfexpert.com

The

iShares DJ Transportation Average Fund

gained 0.59% Tuesday. Yet the exchange-traded fund ended the day with $87 million less in assets under management, meaning it shed 17.5% of total assets in a single trading session.

Now add share volume into the equation. Volume for the

S&P 500

was average Tuesday. Yet the volume on IYT was 2.25 times greater than normal.

Extraordinary trading volume and/or exceptional selling into strength (or conversely, buying into weakness) often signify a turning point. Indeed, the last time that IYT had this much trading volume was in the first week of February -- smack in the middle of the correction's bottom.

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It appears most of the outflow came from block trading activity from institutional investors. And although it is difficult to assess the significance of advisers selling nearly one-fifth of IYT's total assets into the teeth of the cyclical bull, it's clear that some folks believe it is time to take profits.

IYT already trades slightly higher than its average five-year price-to-earnings ratio. (See

Trailing P/E Ratios of iShares Sector Funds

.) Perhaps the trading activity is indicative of April's earnings expectations; that is, the "E" for transporters may not be able to keep pace with the current "P."

Or perhaps this has little to do with the bull market stalling out, and more to do with sector rotation. Transports have been big time outperformers. Maybe a shift to underperforming segments like

iShares Energy

(IYE) - Get Report

is in the works.

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Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. Web site.

Gary A. Gordon, MS, CFP is the president of Pacific Park Financial, Inc. He has more than 20 years' experience as a personal coach in money matters, including risk assessment, small business development and investment. Gordon is often asked to consult as an educator. He has taught financial concepts in Mexico, Singapore, Hong Kong and Taiwan. He also wrote the draft copy for a McGraw-Hill publication, Maverick Investing. Gordon hosts "In the Money with Gary Gordon" on San Diego's 1700 AM and writes commentary for the International Business Times as well as TheStreet.com.