As global economies continue to reopen, the worldwide transportation infrastructure is well positioned to capture pent-up demand for goods and travel, by both sea and sky.
In the upcoming webcast, In a Post-Lockdown World, These Strategies Offer Exposure to Transportation’s Rebound, Frank Holmes, CEO of U.S. Global Investors, will discuss how loosened restrictions and the reopening of economies around the world can potentially benefit both the airline and shipping industries alike. The webcast will also do a deep dive into how advisors can gain exposure to these shifting trends for their clients’ portfolios heading into the second half of the year.
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.
Similar to other industries, shipping is seeing higher rates of volatility due to sporadic COVID lockdowns, the conflict in Ukraine, surging inflation, and other challenges, according to U.S. Global Investors. As a result, shares of container shipping companies have fallen from their March highs. Investors need to keep in mind, though, that shipping is a long-term growth story, particularly in emerging and developing economies.
Looking further out, as the global population continues to expand, raw materials will be needed across the globe for use in infrastructure, manufacturing, food, and other applications, which is good for the shipping industry.
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.
A majority of the major U.S. airline carriers reported their first operating profits since the start of the pandemic over the last few weeks, which is great news for the airline industry.
Looking at the airline industry, Delta Air Lines recently announced an order for 100 Boeing airplanes worth upward of $13 billion, a huge sign that indicates the company is bullish on the future of flight demand. JetBlue also won the bidding war against Frontier Airlines, to acquire Spirit Airlines for $3.8 billion, making the combined JetBlue and Spirit the fifth-biggest carrier in the U.S.
Financial advisors who are interested in learning more about the airline and shipping industries can register for the Wednesday, August 10 webcast here.