The First Ever Shipping ETF

A very interesting ETF launched on August 25, 2008 – the Claymore/Delta Global Shipping Index ETF (SEA). This is the first ever ETF that tracks only companies involved in the global shipping industry. In case you are not familiar with ETFs- which you should be since I think they are one of the greatest things to happen to the investment world in the last 2 decades-  ETF stand for Exchange Traded Fund. These investment vehicles are traded just like stocks, and have very low expense ratios (and no loads).  Essentially, ETFs are indexes that track a basket of stocks while giving investors easy diversification and tax efficiency with very low fees.

SEA’s Specs

SEA is comprised of 30 securities, with a weighted average market cap of 2.9 billion and a weighted average P/E of 10.3. Popular names in the fund include such global shipping players as DRYSHIPS INC (DRYS) (2.48 %), FRONTLINE LTD (FRO) (3.91 %), EUROSEAS LTD (ESEA) (4.57 %), NAVIOS MARITIME HOLDINGS (NM) (4.21 %), and DIANA SHIPPING INC (DSX) (4.09 %). The fund also sports a very low expense cap of .65 percent. The top country weightings of the index are Greece – 35.3% (surprise, surprise), USA  - 19.08%, Bermuda – 15.37 % and Bahamas - 10.09%. The fund will also distribute a dividend( if there is any) on a quarterly basis.

Why I like SEA

I like SEA because I like the shipping sector and SEA gives me a low cost, diversified way to play the sector. I like the shipping sector because of the shortage of dry bulk capacity coupled with an increase in shipping demand coming from manufacturing growth in Asia and new investment in infrastructure worldwide. Dry bulk capacity lagged due largely to the credit crisis, which held back some investment in new shipyards - that’s the supply part. As the trend toward globalization continues, demand for shipping should remain strong- that’s the demand part. Global transport demand should also grow with the move towards urbanization in the emerging markets and greater trade due to greater international wealth.

Disclosure: none

Comments

[John C. Lee:]

I like.

2008 Aug 29 04:09 AM

[User 120461:]

FRC in Boston told me about this one a few weeks ago, I should have listened and set up Barclays with the idea...

2008 Sep 04 04:46 PM