JETS follows a type of smart-beta index that screens for multiple fundamental factors, including cash return on invested capital (CROIC) with additional inputs based on sales per share growth, gross margins, and sales yield. The ETF includes a hefty tilt toward airlines, but it also holds aircraft manufacturers and airports & terminal services.
Delta “has steadily raised its quarterly payout, most recently in 2016, to 20.25 cents a share, a 50% increase from its previous level. And from the perspective of returning capital to shareholders, Delta has earned good marks,” according to Barron’s.
The ability of JETS and its holdings to rise in the face of rising oil prices, usually a major headwind, is undoubtedly impressive. It is also encouraging because some market observers believe oil prices can continue climbing.
Other catalysts include, renewed airline pricing power evidenced by higher ticket prices, and more fees paid per traveler, increased airline profitability, new aircraft program launches and continued demand for aircraft models and technology.
For more information on airline ETFs, visit our Airline category.