Launch of Europe’s first global airline industry ETF offers investors pure play exposure to rebounding airline industry
The launch of Europe’s first global airline ETF, US Global Jets UCITS ETF (JETS) on the HANetf platform will deliver exposure to the airline industry as it tracks companies within the commercial airline, aircraft manufacturing, and airport & terminal services industries.
The JETS airline ETF will list on the London Stock Exchange in June and will be passported for sale across Europe.
Pre-Covid, the airline industry was booming as carriers streamlined operations, improved their balance sheets, and managed to grow profits by introducing more ancillary (non-ticket) fees. The coronavirus disrupted the industry tremendously, but as vaccinations start ramping up around the world and the global economy re-opens, investors are now presented with a unique opportunity to access the recovery story.
There is no doubt that 2020 was a difficult 12 months for airline stocks, but from a value investor’s perspective, this means the industry is on sale at a deep discount. Commercial aviation still has some challenging times ahead of it, but leisure travel has already begun to recover and the big four US carriers - American, United, Delta and Southwest – are all up double or triple-digits for the 12 months ended 23 March 2021.
With JETS, investors will gain broad exposure to international airlines, which is crucial, as the emergence and growth of the middle class in the developing world has arguably been one of the most important factors in the worldwide rise in air travel demand.
As the coronavirus pandemic slows, vaccines roll out and the global economy opens back up, the US Global Jets UCITS ETF is well positioned to capitalise on the regeneration of the airline industry. The ETF will have a Total Expense Ratio of 65bps. JETS tracks the US Global Jets Index which achieved back-tested returns of 57.32 per cent in the past 12 months and 19.28 per cent since inception (30/06/2011).
US Global Investors listed their US Global Jets ETF in the US in 2015 and it is now one of the prime ways to invest in the airline industry using an exchange traded fund. Assets under management currently stand at just over $4bn AUM. US Global Investors will bring all the expertise the have garnered running this ETF and now provide it to European investors in a UCITS ETF for the first time.
Frank Holmes, US Global Investors, Inc. CEO and Chief Investment Officer says: “Here in the US, leisure travel is steadily recovering as the total number of vaccines administered approaches 300 million. The EU, on the other hand, has administered roughly 200 million vaccines as of May 17, while daily new infections are dropping but remain elevated compared to the U.S. Therefore, we still believe there is great upside potential in terms of European commercial flight demand, especially now that EU officials have agreed that member states should start allowing fully vaccinated foreigners to visit.
Like US investors, Europeans are signalling that they want investment vehicles that seek to capitalise on the reopening of the global economy. According to the European Fund and Asset Management Association’s (EFAMA) review of investment trends in 2020, UCITS net assets increased 7.6 per cent during the year, with much of this growth occurring in the fourth quarter, when vaccine breakthroughs raised hopes that travel restrictions would be ending sooner rather than later. I believe our upcoming UCITS airlines ETF, US Global Jets UCITS ETF, in collaboration with HANetf, will meet EU and United Kingdom investors’ demand for such a product.”
Hector McNeil, co-Founder and co-CEO at HANetf, says: “It’s no secret that the travel industry has suffered tremendously as a result of the coronavirus pandemic. However, as the light at the end of the tunnel begins to shine more brightly, many investors will have rightly identified the sector as one of the key recovery stories of 2021.
As restrictions are lifted, we expect the pent-up desire for international travel to quickly be realised and as such, have launched the US Global Jets UCITS ETF (JETS) as a means to offer investors exposure to the rejuvenated sentiment surrounding the Airline industry.
As JETS has a US listed, sister ETF with USD4 billion assets under management and six years’ track record, it shows the value of the HANetf model in providing an efficient way for US and global managers to access the European ETF market in a very efficient manner. We are very excited to partner with such an experienced manager and offer this ETF to European investors. It clearly shows the value add and differentiation of the HANetf platform versus the multiplicity of ‘supermarket’ ETF providers.
"Our range of thematic ETFs is witnessing exponential growth, as opportunities to develop products born out of both necessity and innovation continue to present themselves. We are thrilled to offer the European ETF market its first pure-play Global Airlines Industry ETF and look forward to announcing more fund launches in the near future.”