The Iran war effect: The shipping sector has become the new hot investment arena

The shipping sector is attracting long-term investors against the backdrop of the crisis in the Middle East, which is raising the potential for high returns on vessel prices and shipping rates. Asset managers holding investment portfolios in the shipping sector, including vessels or equity investments, noted a sharp increase in interest from pension funds and large institutional investors looking for exposure to tangible assets.

"Large investors managing mutual funds with billions of dollars say: 'I like the shipping sector, so I'm buying stocks now'," said Nikolas Tirogalas, CEO of the London-based asset management firm Tufton. Investors are buying shares in Tufton, which in turn invests in ships. "All the meetings we held in the last two quarters were with investors who increased their holdings in the company after each meeting," he said.

According to Andreas Povlsen, head of shipping at the non-bank credit company Hayfin, investors, especially those interested in long-term assets, have realized the wide range of "real assets generating cash flow" linked to global trade. "We see investors who held other tangible assets like planes or real estate and are pulling back from them; perhaps the party has simply become too crowded," he added. Hayfin is currently raising capital for a second fund in the shipping sector, with the goal of doubling the value of capital commitments compared to the previous $620 million fund.

A number of asset managers noted that investors are also looking for "HALO," an acronym for "hard assets with low obsolescence," meaning those that are not affected by the stock market enthusiasm surrounding AI. Shipowners expected to experience a slowdown this year due to the high number of new ships entering the market, but the de facto closure of the Strait of Hormuz and disruptions in the Red Sea forced ships to take longer routes, so a higher proportion of the fleet was still active at any given moment. As a result, asset prices and shipping rates in all categories of the shipping sector remained at or near record levels.

According to ship traders and investment managers, the trend will continue as long as the crisis with Iran persists. Thus, the value of the Breakwave Tanker Shipping ETF, the only one focused on tanker freight rates, which reached historical highs following the demand for ships ready to transport cargo through Hormuz, has jumped more than 23 times this year. According to data from the maritime information company Veson Nautical, investments in shipping company stocks by American and British investment firms remained at levels similar to 2025, when they reached a 20-year high.

"Institutional investors entered because the market is at a peak," said another asset manager involved in the sector, who warned that there could be "more slowdowns than ups." In contrast, shipowners believe that due to the need to rebuild the Middle East and replenish oil stocks, rates will remain high even after the war ends. According to Tirogalas's assessment, "we are not even close to the top end of the market" for dry cargo ships used to transport goods like iron ore and grain. Prices for all types of ships, especially tankers, are approaching the highs recorded in 2008.

"We didn't know if we would see this phenomenon again," said Olivia Watkins, a senior manager at Veson. According to her, this is also due to the exceptionally high profits from chartering. "When the market is so high, the question always arises: why are owners buying? But because they earn so much from chartering the ships, they can pay for a ship within a few years," she said. Asset managers are also among the ship buyers. This year, Hayfin ordered seven oil tankers and two for transporting liquefied natural gas, while JPMorgan's asset management division ordered eight large oil tankers for at least $1.26 billion, with an option for two more.