Shipping companies with fleets have plummeted in valuations recently, i.e. since 2009 and have not yet recovered, even though global trade has been on the rise again. Prior to the 2008 financial crisis, many shipping companies had seen the high rates ( Baltic Dry Index over 10K USD then, less than 2K USD now) they were getting for vessels and promptly placed orders for more vessels. The resultant over-supply of ships has found the oil tankers making money by parking outside terminals and serving as extra holding tanks due to oil's contango, while the container ships have been idled.

Industry news indicates that from 2007 to January 2011 the global container shipping fleet expanded ~40% to 14.24 M TEUs now, and that we have over 3 M TEUs on order with delivery over the next two years. I hope to be pleasantly surprised that aggregate shipping demand will rise that much. While shipping companies seem cheap now, they do not seem cheap enough yet.

The exposure to European bank equities saw the fund (in green) lag the S&P several days into the new year as they sold off (perhaps due to fear regarding the now-successful bond auctions by Spain, Italy, and Portugal). Those losses reversed and the fund outpaced the benchmark (in blue) and has continued to during the recent unrest in the Middle East. While the fund has little direct exposure to the Middle East, oil prices affect us all....