Investors are currently limited to the iShares Dow Jones Transports (IYT) as a transport ETF option with net assets of $698 million and 20 component stocks (stats as of 8/8/08 from the iShares website). The top five holdings account for 43.2% of invested assets and include the following: Burlington Northern Santa Fe (BNI, 10.7%), Union Pacific (UNP, 9.6%), FedEx (FDX, 9.1%), Overseas Shipholding Group (OSG, 6.9%), and United Parcel (UPS, 6.9%). In addition, the iShares Dow Transports ETF also includes three passenger airlines: AMR Corp. (AMR), Continental (CAL), and JetBlue (JBLU); although the combined weighting for these three companies is negligible; they represent an opportunity cost by occupying three positions in the fund and omit industry leader Southwest Airlines (LUV).

As evidence of increased commercial interest and product development of globally-focused transport ETFs among major ETF providers, the following ideas have recently been filed with the SEC: Claymore/Delta Global Shipping, PowerShares Global Transportation, and SPDR Transportation.

My strategy for a family of four global transport ETFs is outlined below with links provided to more details on the component index for each segment:

1.) Global Railroad BULLISHares – long rail transport

2.) Global Maritime BULLISHares – long waterway transport

3.) Global Airline BEARISHares – short passenger airlines

4.) Global Logistics PerformIdex – Select the top 15 market cap-weighted companies from the entire Standard & Poor pool of companies that are characterized as “Global Logistics” companies from EACH of the following three segments (indexes A-C below) of the transport industry to create an equally-weighted “Global Logistics PerformIdex” ETF comprised of 45 companies:

a.) Global Maritime: Select companies from the global maritime industry with market caps of between $250 million to $7.5 billion (USD) which derive at least EITHER 75% of trailing 12-month revenues OR $500 million (USD) in trailing 12-month revenues from any of the following activities:

i.) marine freight/commodities transportation services
ii.) barge commodity transportation services
iii.) towboat/tugboat services
iv.) the management or leasing of marine vessel fleets

b.) Global Trucking, Air Freight, Delivery, Freight Forwarding, and Integrated Logistics: All selected Global Trucking, Air Freight, Delivery, Freight Forwarding, and Integrated Logistics companies must have market caps of at least $250 million and derive at least 75% of trailing 12-month revenues from any of the following activities:

i.) logistics and management support services for all types of transportation companies
ii.) air freight transportation and services
iii.) all types of freight forwarding services
iv.) mail/package delivery and transport services
v.) roadway freight transportation services
vi.) logistics and management support services for roadway transportation companies
vii.) roadway freight forwarding services

c.) Global Railroads: All selected Global Railroad (RR) must have market caps of at least $250 million and derive at least EITHER 50% of trailing 12-month revenues OR $1 billion in trailing 12-month revenues from the following RR industry activities:

i.) passenger or rail freight transport services
ii.) railcar leasing
iii.) railcar fleet management
iv.) railcar or component parts manufacturing
v.) railcar or component parts repair or refurbishment.

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