New ETF Ready to Take Flight: FAA

Claymore/NYSE Arca Airline ETF (FAA) received clearance for take-off today, but as of this writing, it is still sitting on the runway, awaiting that elusive first trade.

This new ETF is based on the NYSE Arca Global Airline Index, ”a modified equal-dollar weighted index designed to measure the performance of highly capitalized and liquid U.S. and international airline companies…”

The unusual weighting structure appears designed specifically for this index.  It divides the index into four groups based on domicile and liquidity, with 70% of weighting reserved for domestic airlines.  Additional details regarding the weighting methodology are in the ETF Fact Sheet.

This is the second ETF from Claymore to focus on a subset of the transportation sector.  Their first was the Claymore/Delta Global Shipping Index ETF (SEA) launched on August 25, 2008.  Although FAA is the first ETF to focus on air transportation, it is not the first fund in this space.  Fidelity Select Air Transportation (FSAIX), an open-end mutual fund has been trading since 1985.

Disclosure:  no positions in the mentioned funds