Investors have a number of different investment vehicles available to them, so parking their money is easy to do. It’s just a matter of understanding which one(s) make the most sense. Take mutual funds, for instance. These vehicles provide a highly liquid and diversified way to invest, and they’re also the most popular choice for investors. Mutual funds cover a wide variety of industries and different asset classes. They’re also popular because they reduce risk and are often actively managed, which means their holdings and asset allocations are readjusted on a fairly consistent basis.
Some mutual funds concentrate on the transportation sector—a segment of the economy that focuses on companies that move goods and people. This sector also encompasses the infrastructure and equipment needed to do so. This article covers some of the basics of the sector as well as how the mutual fund industry invests in it. We also list two of the best-regarded funds specializing in transportation stocks. All figures are current as of February 2, 2026.
Key Takeaways
- Mutual funds are popular with investors because they are highly liquid and diversified, and cut down on risk.
- Transportation is a sub-sector of the industrials market, and encompasses large, well-established companies.
- Fidelity’s Select Transportation Portfolio is heavily invested in U.S. equities and focuses on airlines, air freight, and logistics.
- The Rydex Transportation Fund provides investors with capital appreciation by investing assets in transportation equities.
Transportation Sector: An Overview
The transportation industry is a sub-sector of the broad industrials market and includes companies operating airlines, trucking, and railroad services. The majority of goods purchased by consumers and other businesses must travel from one location to another, making the transportation industry integral to an economic infrastructure.
Transportation stocks are considered cyclical, meaning company profits flow in line with the movement of the overall economy. When markets are performing well, cyclical equities such as transportation company stocks tend to generate returns for consumers. Similarly, a downturn in the broader market leads to declining returns for shareholders of transportation industry stocks.
A vast majority of the companies operating within the transportation sector are large and well-established, providing opportunities for investors to receive enhanced returns through consistent dividend payouts. Investors can utilize growth-oriented or value-oriented equities as a complement to other large-cap and midcap holdings, as both exist in abundance within the sector. While there are specific benefits made available to investors in the transportation industry, sector-focused investments are not without risk.
Important
There are plenty of growth-oriented and value-oriented equities to choose from within the transportation sector.
The transportation industry is deeply affected by the fluctuating costs associated with fuel, interest rates, less-than-ideal weather, fuel surcharges and taxes, license and registration fees, and insurance premiums for required coverage.
Fidelity Select Transportation Portfolio
The Fidelity Select Transportation Portfolio (FSRFX), established in 1986, is under the aegis of Fidelity Investments, a provider of professionally managed pooled investment funds for both individual and institutional clients.
The fund seeks capital appreciation by investing a minimum of 80% of assets in the common stocks of companies primarily engaged in providing transportation services to the public or those with a focus on the design, manufacture, distribution, or sale of transportation equipment. Both domestic and foreign common stock holdings are included within the fund, and each issuer is screened using fundamental analysis to determine financial strength and industry position. As of Jan 31, 2026, the portfolio’s net assets total $482.47 million.
Fidelity Select Transportation has generated a 10-year annualized return of 12.59% for investors. For the life of the fund, it has returned investors 12.10%. The fund operates with an expense ratio of 0.69%. Investors are not charged an up-front sales load upon purchase, nor is a deferred sales charge assessed at redemption. There is no minimum investment.
The fund’s top sub-industry holdings within the portfolio include:
- Uber: 16.06%
- Union Pacific Corp: 15.52%
- Delta Air: 8.95
The fund is invested heavily in domestic equities, with a small portion devoted to both international companies and cash and other assets.
Rydex Transportation Fund
The Rydex Transportation Fund (RYTSX) is part of the Rydex family of mutual funds and was established in 1998. This sector-focused fund is managed by a team at Guggenheim Investments. It seeks to provide investors with capital appreciation by substantially investing all of the fund assets in equity securities of companies that fall within the transportation category.
Holdings are focused on companies headquartered and operating within the United States, but the fund may also purchase American Depositary Receipts (ADRs) to gain exposure to foreign stocks. There’s also a chance the fund may include derivatives such as futures contracts, options on securities, and stock indexes. Fund managers also focus the fund’s $6.2 million assets in companies with small-cap or mid-sized market capitalization.
The Rydex Transportation Fund has generated a 10-year annualized return of 8.93% for investors. The fund’s expense ratio of 1.68% is higher than similar sector-focused funds within the transportation category. Investors are assessed an up-front sales charge of 4.75% when shares are purchased, although no deferred sales charge is imposed on redemption. A minimum initial investment of $2,500 is required for non-qualified and qualified accounts.
The majority of this mutual fund is invested in:
- Automobiles: 24.95%
- Ground Transportation: 24.75%
- Passenger Airlines: 12.73%
The fund’s top five holdings include Tesla, UPS, Union Pacific Corporation, Uber, and General Motors.
The Bottom Line
It is important for investors to utilize sector investments such as transportation equities as part of a comprehensive asset allocation strategy for long-term investing. Mutual funds provide a simple way for investors to gain access to the transportation industry while mitigating some of the risks associated with the sector.