Three Transportation ETFs Your Broker Forgot to Mention

Think about it: Transportation is part of everyday life for nearly every person on the face of the earth. Whether it's a bike in Beijing, a subway in New York or a car on a freeway in Los Angeles, most of us need transportation every day. And by the way, transportation is an essential part of the global economy. Planes, trains and ships all play vital roles in ensuring commerce happens. Considering that, it's kind of odd that there aren't more ETFs focused on transportation. In fact, many investors probably think there's only one ETF devoted to transportation: The iShares Dow Jones Transportation Average ETF IYT. Home to the likes of FedEx FDX, UPS UPS and the major railroad operators among others, IYT is the dominant transportation ETF with over $311 million in assets under management. However, there are a few more transportation ETF choices out there your broker may have forgotten to tell you about. Here they are. Guggenheim Airline ETF FAA: And then there was one. After dealing with some competition from Direxion for a little while, FAA is the lone ETF on the market devoted to airlines. FAA is nearly three years old, but has just $18.1 million in AUM. That might be indicative of how tricky (and unpopular) investing in airline stocks is. Earlier this year, we noted FAA is a great way to short oil without having to short futures or oil stocks. That might be the best thing that can be said of this ETF. Guggenheim Shipping ETF SEA: There was a time before the financial crisis that shipping companies were all the rage. That changed in a heartbeat, but don't be too quick to dismiss the Guggenheim Shipping ETF, the lone ETF option for getting exposure to global seaborne shipping firms. SEA doesn't track the more speculative names in this market segment, but it does have an emphasis on the shipping world's high dividend names. What that gets you is an ETF with a stealth yield of 6.75%. A move above $17 would be a breakout for SEA. SPDR S&P Transportation ETF XTN: A lot of investors probably don't know about the SPDR S&P Transportation ETF, but it is the most direct competitor to IYT. XTN is home to 38 stocks, nearly double IYT's lineup, and the SPDR offering has an expense ratio of 0.35% compared to 0.47% for IYT. That said, XTN isn't exactly like IYT. Our quibble is XTN's 22.5% exposure to airlines is too heavy. That number should be reduced or eliminated altogether and shifted to railroads. Please note there was a PowerShares transportation ETF that closed earlier this year and Global X has filed plans for a railroad ETF. Bull case: The global economy rebounds, stirring demand for the services provided by constituents of all three ETFs. It's that simple. Bear case: U.S. and European economic data points slump and China's economy slows faster than expected.