Investors are turning to global jets exchange traded funds to capture the rebound in the airline industry as investors try to capitalize on an oversold industry that has been pummeled by the coronavirus pandemic.
The U.S. Global Jets ETF (JETS), the lone ETF dedicated to the airline industry, held about $33 million in assets under management in early March, but it now holds about $930 million. According to FactSet data, the ETF enjoyed net inflows for 62 consecutive trading days despite falling prices during the period, the Wall Street Journal reports.
“It was just unprecedented volume explosion,” Frank Holmes, Chief Executive and Chief Investment Officer of investment management firm U.S. Global Investors told the WSJ, adding that strong interest from individual investors, as well as from hedge funds looking to hedge trades in individual airlines, boosted flows.
Many have turned to JETS as a way to bet on the broad recovery of the airline industry that has been among the hardest hit by the coronavirus pandemic after global governments halted air travel in a bid to contain the outbreak. The play has also been a way for investors to bet against Warren Buffett, Berkshire Hathaway Inc.’s chief executive, who sold major stakes in the four biggest U.S. carriers earlier this year.
“It is certainly the type of investment you make knowing that the consensus is against you, at least it was at the time we were buying in,” Keith DeGreen, CEO of Scottsdale, Ariz.-based DeGreen Capital Management LLC, told the WSJ.
“I don’t think it takes a lot of extremely sophisticated analysis to recognize that this is a particular sector that got sold off in a panic, that it’s going to come back,” DeGreen added.
JETS has become a popular way for many retail investors to gain diversified exposure to the airline industry as opposed to betting on single airliners. According to the Robinhood trading platform data, the number of JETS investors has increased to almost 28,000 from around 360 at the start of March.
For more information on the airline ETF, visit our Airline category.