The Dow Transportation Index hit a new high for the year on Friday as transport stocks continue to outperform the broader market in 2010.

IYT

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The Dow Jones Transportation Average Index Fund (IYT) is up 25% on the year compared to plus 10% for the S&P 500.

IYT has benefited from its concentration in railroad stocks such as Union Pacific and Kansas City Southern which are up 43% and 65% in 2010 respectively. Railroads have seen volume grow faster than the overall economy this year while reaping the benefits of cost reductions over the past couple of years.

The $600 million IYT exchange traded fund has 21 holdings, carries an expense ratio of 0.47% and currently yields 1.2%.

For other ETF investing options, see the list of industry ETFs.