ETFs to Watch as Travel, Entertainment Spending Improve

Investors can consider leisure sector-related exchange traded funds as American Express is pointing to rising travel and entertainment spending.

American Express is seeing consumer spending start to normalize as the economy reopens and Covid-19 infection rates decline. Specifically, spending on travel and entertainment categories jumped by 40% in March over February, while bookings through American Express Travel surged by 50% in the first quarter compared to the fourth quarter, the Wall Street Journal reports.

Chief Financial Officer Jeffrey Campbell also said the number of people signing up for the company’s co-branded cards with Delta Air Lines Inc. increased 90% for the quarter compared to the fourth quarter. He argued that here is an inflection point around the improving economy and increase in vaccinations.

“People are finally able to exercise the pent-up demand for travel that we believed in the whole time,” Campbell told the WSJ.

Reflecting the increased consumer spending habits, billed business, or the amount spent on American Express cards, rose 6% over the first quarter year-over-year when adjusted for currency fluctuations. The measure dipped by half for the travel and entertainment category during the quarter year-over-year, but still gained in March as compared to the pullback in January and February.

“In 2022, we’re really assuming…that consumer travel and entertainment spending is mostly back to where it was pre-pandemic,” Campbell said on the company’s earnings call Friday, adding that “domestic travel in the U.S. and around the globe will be the fuel that gets us to that level.”

As a way to capture the rebound in consumer spending, investors can look to something like the Invesco Dynamic Leisure and Entertainment ETF (PEJ). PEJ is based on the Dynamic Leisure & Entertainment Intellidex Index. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value. The Index is comprised of common stocks of 30 US leisure and entertainment companies.

PEJ 1 Year Total Return

Additionally, investors can look to the U.S. Global Jets ETF (NYSEArca: JETS) to access the growing global airline industry. 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 and airport companies.

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