Investors interested in the thematic approach to the airline industry may look to a targeted exchange traded fund.
Investors can look to the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growth opportunity in the airline industry.
JETS follows the U.S. Global Jets Index, which uses fundamental screens like cash return on invested capital, sales per share growth, gross margins and sales yield to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
“The way that we construct JETS; it all starts with the heaviest weighting is the big four domestic carriers, so Southwest, United, Delta and American,” Holly Schoenfeldt, Marketing & Public Relations Manager for U.S. Global Investors, said at the 2018 Morningstar Investment Conference. “It also has other companies like Boeing in it, so it’s kind of a mixture of global airline names, not just passenger airlines.”
JETS’ Top Holdings
Top holdings include United Continental (NYSE:UAL) 12.7%, Delta Airlines (NYSE:DAL) 11.8%, Southwest Airlines (NYSE:LUV) 12.1%, American Airlines Group (NYSE:AAL) 11.2% and Spirit Airlines (NYSE: SAVE) 4.4%. Airlines make up the lion’s share of the portfolio at 87.6%, and the ETF includes some other sub-sectors like aerospace & defense 7.0%, manufacturing 3.0% and transportation infrastructure 2.0%.
The JETS ETF also includes some foreign exposure. While the U.S. makes up 79.5% of the fund’s portfolio, the ETF also holds Turkey 3.0%, UK 3.0%, Canada 2.0% and France 2.0%, among others.
“It’s a really, a dynamic rules-based ETF that gives you exposure to more than just domestic but global, and more than just airlines but the related industry,” Schoenfeldt added.
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