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Monday, July 20, 2009

Time to COnsider SHipping ETF's, Sea is my choice

When countries around the globe start resuming business as usual, shipping will be a given necessity and exchange traded funds (ETFs) are one way to gain access to this sector and satiate your investment needs.

The Claymore/Delta Global Shipping (SEA) reflects the Delta Global Shipping Index, which measures the performance of maritime shipping industry firms in global developed markets, writes Don Dion for TheStreet. The ETF’s portfolio has dry bulk goods and the leasing and/or operating of tanker ships, container ships, specialty chemical ships and liquefied gas or dry bulk goods transport ships.

SEA has 30 holdings with an expense ratio of 0.65%. The fund has a 58.7% allocation in industrials and 41.3% allocation in energy. The components within the fund are based on market capitalization and liquidity.

Investors are coming back into shipping, realizing that countries such as China are demanding materials en masse. More recently, the shipping industry is being driven by steel demand and higher demand from China and emerging markets will likely raise rates on dry bulk shipping.

When talking about the shipping industry, the most important ratio is “bottoms,” or number of ships, to demand for transported goods. If there are more products than bottoms then the rates are high; if there are more bottoms than cargo, then rates are low.

* Claymore/Delta Global Shipping (SEA): up 17% year-to-date

Disclosure I am long SEA in my shipping folio. (Weyco Group, Inc.)

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