JETS tracks U.S. Global Jets Index, which is comprised of U.S. and international passenger airline companies, aircraft manufacturers and airports and terminal services companies. The universe of airline companies around the globe is screened for investability, a minimum market cap of $100 million and liquidity. The underlying index will hold between 30 and 35 airline companies. [New Airline ETF Takes Off]
Of course, oil, airlines’ largest input cost, is a pivotal part of the JETS story. Deutsche Bank “estimates that nearly 110 percent of the earnings gain will derive from lower fuel prices. It states that ‘the industry over the past several years has demonstrated its ability to successfully offset most, if not all, of the rise in fuel expense via a combination of cost savings and various revenue initiatives,’” according to U.S. Global Investors.
However, there is more to the JETS story, including increasing shareholder rewards. In May, Delta (NYSE: DAL) and Southwest announced dividend increases and buyback expansions. American Airlines (NasdaqGS: AAL) introduced a dividend last year.
Delta, Southwest and American combine for 32.5% of JETS’s weight. The new ETF is off to an impressive start with $35.7 million in assets under management in just seven weeks on the market.
Financial advisors who are interested in learning more about airline investing and JETS can register for the Thursday June 18 webcast here.