It is hard to ignore the “V-shaped” rally that Crude Oil has experienced since the beginning of this month, with popular Crude Oil tracker USO (U.S. Oil Fund, Expense Ratio 0.45%) rallying from the low $9’s in early August to present levels above $11.25.
How has the price volatility in the Crude space affected the Shipping industry? For clues we can look at The Guggenheim Shipping ETF (NYSE:SEA) (Expense Ratio 0.66%), which remains somewhat small with only $45.2 million in AUM and averaging about 49,000 shares traded daily. SEA also happens to be the only ETF alternative in the “Shipping” space, which falls within the greater category of “Transportation Equity.”
SEA itself tracks the Dow Jones Global Shipping Index and fund literature states “SEA will at all times invest at least 90% of its total assets in common stock, American depositary receipts (ADRs), global depositary receipts (GDRs) and master limited partnerships (MLPs) that comprise the index and the underlying stocks in respect to the ADRs and GDRs in the index.” Furthermore, Guggenheim explains that SEA “Offers potential to benefit from global commerce growth through exposure to the global shipping industry – oftentimes a leading indicator for global commerce and economic trends,” and “May provide enhanced dividend yield as well as potential income stream.”
Currently we see a yield of 1.67% in SEA, which is actually below that of an S&P 500 tracker as measured by say SPY (SPDR S&P 500, Expense Ratio 0.09%). When we look at the top individual equity holdings in SEA we see some familiar companies here whom anyone paying attention to the names on the side of shipping containers being loaded at ports will likely recognize.
The number one holding is AP Moeller-Maersk, with a substantial 19.44% weighting. After this, there is quite a drop-off in terms of the other four holdings that round out the top five in the fund, with Nippon Yusen (7.44%), Kawasaki Kisen Kaisha Ltd. (6.67%), Cosco Pacific LTd. (5.42%), and Matson Inc (MATX, 5.17%) filling out these slots. Of these top five holdings, only one, MATX is a U.S. listed stock. However, from a portfolio standpoint, the U.S. has the most representation within the fund at 26%, followed by Denmark (19%), Japan (15%), China (9%), and smaller weightings to countries such as Monaco (9%), Greece (8%), Singapore (5%), United Kingdom (5%), Belgium (4%), and Norway (2%).
SEA shares fell $0.07 (-0.61%) to $11.45 in Monday morning trading. SEA has fallen 9.6% year-to-date, versus a 7% gain in the benchmark S&P 500 during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.
Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
