With the global economy getting back on its feet, supply chains have been dominating headlines. What’s lost in the noise is how the shipping and air freight industries will potentially benefit from the enormous, synchronized rebound in global trade, all while fiscal stimulus appears to be fueling consumption.
In the upcoming webcast, Can Investors Capitalize on Supply Chain Disruptions? New ETF Opportunity, Frank Holmes, CEO of U.S. Global Investors, will explore how a supply and demand imbalance, partially due to COVID-19 and the upcoming holiday season, may be a boon for investors looking to potentially enhance their portfolios ahead.
For example, U.S. Global is currently working on the U.S. Global Sea to Sky Cargo ETF (NYSEArca: SEA), which will track the U.S. Global SEA Index. The underlying index includes companies involved in the marine shipping, air freight/couriers, or other transportation industries, as determined by independent industry listings, (collectively, “Cargo Companies”) with an allocation of 70% of the index’s weight to sea shipping companies and 30% to air freight companies at the time of each quarterly reconstitution and rebalance of the index, according to an SEC exemptive relief filing.
Specifically, the top six shipping companies with a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to-price, and earnings-to-price get a 5% weighting each. The next seven shipping companies by a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to-price, and earnings-to-price get a 4% weighting each. The next six shipping companies by a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to price, and earnings-to-price get a 2% weighting each. Lastly, the top 10 air freight companies by a combined ranking of market capitalization, cash flow return on invested capital, cash-flow-to-price, and earnings-to-price each get a 3% weighting each.
Additionally, investors have turned to the U.S. Global Jets ETF (NYSEArca: JETS) as a way to access the recovery in the global airline industry. JETS has also become a popular mechanism for many retail investors to gain diversified exposure to the airline industry as opposed to betting on single airliners. JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers, airport companies, internet media, or other services related to airlines.
Financial advisors who are interested in learning more about the global supply chain can register for the Thursday, December 9 webcast here.