A Global Logistics PerformIdex to Compete with IYT

The above table represents a Global Logistics PerformIdex (performance stock index) that I have developed as an equally-weighted 30-stock composite index of worldwide transport companies.

Excluding passenger airlines, companies are chosen from the following groups: railroads (8 chosen from 28 total), trucking (8 chosen from 26 total), maritime/shipping (8 chosen from 57 total), and air freight/delivery (6 chosen from 22 total). I have developed separate indexes for each of these groups and a rating system which factors in market cap weighting, trailing 52-week stock price performance, and revenue weighting in order to choose the leading stocks from each category.

An exchange-traded fund [ETF] benchmark comparison to my Global Logistics PerformIdex is the iShares Dow Jones Transports (IYT) with net assets of $649 million, 20 component stocks, and a -6.7% price change over the last 52 weeks. The top four holdings account for over one-third (36%) of the holdings and include the following: Burlington Northern Santa Fe (BNI – 10.5%), Union Pacific (UNP – 8.8%), FedEx (FDX – 8.6%), and Overseas Shipholding Group (OSG – 8.5%). In addition, the iShares Dow Transports ETF also includes three passenger airlines, including AMR Corp. (AMR), Continental (CAL), and JetBlue (JBLU); although the combined weighting for these three companies is barely over 2% so their impact on the overall performance is negligible.

The main advantages for investors in a potential ETF based on the Global Logistics PerformIdex would include the lack of passenger airlines (although they have a small weighting in the Dow Transports ETF, there is an opportunity cost in holding three companies in a weak industry), global diversification (including companies listed only outside of the United States), quarterly rebalancing (making it a semi-active ETF based on companies with the highest ratings), and the breakdown into four distinct transport categories (to ensure equal representation from rails, air freight/delivery, trucking, and shipping companies).

Disclosure: None