Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the global shipping industry to thrive as our world's economies get back on track, the Guggenheim Shipping ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The shipping ETF's expense ratio -- its annual fee -- is 0.65%, which is considerably lower than most stock mutual funds though a tad higher than many ETFs.
This ETF's performance isn't ready for prime time yet, as the fund is just over a year old and has had a lousy time of it so far, which is consistent with how shipping stocks have done lately. It's also still quite small, with roughly $33 million in assets. You might want to just keep it on your radar, or consider it for investment now. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 28%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Some of this ETF's components helped the ETF out over the past year. Alexander & Baldwin
But many other companies hurt the ETF, although they could have a more positive effect in the years to come. Frontline
The industry has been whacked by an oversupply of containers and insufficient demolition of old tankers, but some industry insiders are bullish now, thinking the worst is over. Others, such as my colleague Adam Crawford, think the shippers may not be done dropping for a while, and advocate focusing on the strongest ones, such as Diana Shipping
The big picture
Demand for shipping isn't going away anytime soon, though it can vary by economic cycle. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.