Advisors don’t only have to bemoan the U.S. Postal Service’s decline — there are ways to profit from it. It’s worth at least considering an investment in ETFs that have exposure to companies like FedEx and UPS, according to an analysis by S&P Capital IQ.
With the U.S. Postal Service’s stated intention to close over 50% of its 487 mail processing centers and to move First Class mail to a two-to-three day standard from a one-day standard, along with its announcement that it is weighing the idea of ending Saturday mail delivery, FedEx and UPS are poised to benefit, according to the report.
Not only can these two firms pick up the extra demand for time-sensitive deliveries, but they may also be able to increase prices, since competition with the U.S. Post Office has generally restrained industry pricing.
There are several ETFs S&P Capital IQ cited as worthy of further investigation that have UPS in the top 10 holdings. Those are: Industrial Select Sector SPDR Fund (XLI); iShares S&P Global Industrials Sector Index Fund (EXI) and Vanguard Industrials Index Fund (VIS).
The Industrial Select Sector fund (XLI) has UPS as its second largest holding, at 5.6% of the fund’s total assets of $2.7 billion as of year-end 2011. For EXI, UPS is the ETF’s third largest holding, at 3% of its total $175 million in assets, and in VIS, UPS is the fifth largest holding, at 3.5% of $447 million in total assets.
Danielle Reed writes for Financial Planning.
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