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I am not a financial advisor. This post is to provide information and not provide financial product advice. I discuss why I personally chose to invest in a stock, ETF, REIT, investment fund or cryptocurrency (which I have held for over a week) and also share information that is public about the following stock, ETF, REIT, investment fund or cryptocurrency and they are based on my own personal opinion.
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I do not work in the financial industry, so just because I write about it, doesn’t mean you should own it. So, consult with a financial advisor and do your due diligence, RESEARCH!
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I have invested in airline companies, cruise companies, travel services after watching representatives of these companies talked about travel continuing and financial analysts talking about how airline stocks are going up, up, up.
I have seen it go up, up, up and then it crashes down. It’s quite volatile.
As an international traveler, I’m not sure if we are ever going to travel long distance. But for domestic travelers, at least there is good news that people can start traveling again.
But I decided that I do want to invest in travel but until we start to see some normalcy (in terms of long distance travel), I decided to look for a travel-based ETF that would be much safer to invest.
And when it comes to safety, ETFs are the best way to go as they are not too volatile when compared to a regular stock. And so, I decided to invest in U.S. Global JETS ETF (NYSE Arca: JETS).
U.S. Global Investors, Inc. serves as investment advisor to the U.S. Global ETFs. U.S. Global Investors, Inc. is an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the company became a registered investment advisor in 1968 and has a longstanding history of global investing and launching first-of-their-kind investment products. U.S. Global investors is well known for expertise in gold and precious metals, natural resources, and emerging markets.
Since 1989, U.S. Global Investors has been led by CEO Frank Holmes, who purchased a controlling interest in the company that same year. U.S. Global Investors is a publicly traded company (NASDAQ symbol: GROW) headquartered in San Antonio, Texas.
And their two primary funds are JETS and U.S. Global GO GOLD and Precious Metals Miners ETF (GOAU).
Source: Schwab.com
JETS began on April 28, 2015. According to Schwab.com, the fund strategy is as follows:
The investment seeks to track the performance, before fees and expenses, of the U.S. Global Jets Index.The
fund uses a “passive management” (or indexing) approach to track the performance, before fees and
expenses, of the index. The index is composed of the exchange-listed common stock (or depository receipts)
of U.S. and international passenger airlines, aircraft manufacturers, airports, and terminal services companies
(as determined by independent industry listings) across the globe (collectively, “Airline Companies”). The index
may include small-, mid-, and large-capitalization companies. The fund is non-diversified.
The fund has a total assets of $4.0+ billion, a market cap of $91.8 million, enterprise value of $76.0 million and there are shares outstanding of $148 million.
It’s current holdings are around 44 and its top ten are: American Airlines Group Inc. at 11.44%, United Airlines Holdings Inc. at 11.11%, Southwest Airlines Co. at 10.75%, Alaska Air Group Inc. at 4.11%, Air Canada Class B at 4.09%, JetBlue Airways Corp. at 4.01%, Spirit Airlines Inc. at 3.96%, Allegiant Travel Co. at 3.56% and General Dynamics at 3.29%.
But 25.75% is in large cap, 53.87% in medium cap and 16.87% in small cap with 3.51% in micro cap.
So, these companies are a big factor in international traveler and these companies within the top 10 holdings having a heavier debt load, especially during the Pandemic.
But if you look at the TSA Checkpoint Travel Numbers, while not close to 2019 numbers, 2021 is showing much more promise when compared to 2020 numbers.
Currently ZACKS ETF Rank has it at a buy and its ETF Risk is High. Dividend Channel Staff detected large outflows in the ETF back in April.
According to Dividend Channel Staff:
Exchange traded funds (ETFs) trade just like stocks, but instead of ”shares” investors are actually buying and selling ”units”. These ”units” can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the JETS ETF (NYSE:JETS) where we have detected an approximate $98.0 million dollar outflow — that’s a 2.3% decrease week over week (from 154,400,000 to 150,850,000).
I decided to invest in U.S. Global JETS ETF (NYSE Arca: JETS). which is currently at $26.45 and it has hit $32.74 in 2018 and during the pandemic, went down to a low of $12.12 per unit.
According to SEC Monitor, JETS added the following in June 2020: Hainan Meilan International Airport Co., LTD., Travelsky Technology Ltd., Tav Havalimanlari Holding As, China Eastern Airlines Corp. Ltd. While it exited positions in Beijing Capital International Airport Co., Ltd, Aeroports De Paris, Air China Ltd, International Consolidated Airline Group Sa.
Source: Schwab.com
JETS offers two dividends with an average dividend payment at $.0046, a gross expense ratio at 0.60%. Back on December 2019, the ETF had a total of distribution of $0.3911 per share.
In a way, this ETF goes against my strategy of investing in the airline industry as a dividend investor. For one, you don’t get much in dividends and it’s only once a month and its dividend distribution is all over the place and not consistent in growth but the ETF has paid its dividends each January (2015-2019) and in December 2019-2020.
So, why do I invest in travel? I have high conviction towards travel and I also believe that we should hopefully see the price of U.S. Global Jets to return to the $30+ range as it did in 2017-2020. It’s quite logical.
But what JETS offers is airline diversity. Also, holdings of not just American-based airlines but airlines all over the world such as Japan Airlines Co., Ltd., Singapore Airlines, Sydney Airport, Air China, China Easter Airlines, China Southern Airlines, to name a few.
When it went down to $12 in May 2020, there is no doubt that this ETF was going for a bargain price.
I can see those who are holding onto this ETF in hopes it reaches near $40 but I think that for me, it’ll be a longtime hold.
Again, for me, I think this is easier, cheaper and safer right now than investing on individual stock in an airline company. And having been burned with the volatility for the first several months of investing in the airline industry, I don’t want to worry about it anymore and just put my faith in investing in travel through the U.S. Global JETS ETF (NYSE Arca: JETS).
