Dividend-paying airline fund U.S. Global Jets ETF (JETS) is ready to climb skyward with Covid-19 vaccines showing positive results, two top investment fund leaders are forecasting, reports Paul Dykewicz, editor of DividendInvestor.
The airline ETF appears prepared to rise in the coming months when if the COVID-19 crisis is brought under control once a safe and effective vaccine is available for use by the public.
JETS, an exchange-traded fund launched by San Antonio, Texas-based U.S. Global Investors in April 2015, gives investors access to the stocks of air carriers, aircraft manufacturers and related companies worldwide.
Frank Holmes, chief executive officer and chief information officer of U.S. Global Investors, spoke optimistically about the potential rebound of the airline industry during a recent podcast with Kevin O’Leary, chairman of Boston-based O’Shares ETFs.
Holmes recalled past occasions when airline industry stocks plunged only to climb dramatically when financial tailwinds returned. After the horrific attacks on 9/11, the airline industry sector fell steeply before rebounding 80% within the next year, Holmes recalled.
There are other examples of airline stocks roaring back after suffering from turbulence, he added. When SARS hit Asia in February 2003, airline stocks dove before ascending 120% in the next year, Holmes said. In that instance, SARS was contained by the end of 2003.
Another drop in airline stocks occurred during the 2008-2009 global financial crisis when the market endured its biggest fall since the Great Depression in the 1930s amid a housing bubble and an ensuing subprime mortgage crisis in the United States. Within a year, airline stocks gained 80%, Holmes said.
Many people now are looking for a similar “bounce,” Holmes said. “I think it may take a little longer,” Holmes said. “But in 12 months, if you can make 80% on your money, that’s a home run.”
The fund has 40 positions, $2.1 billion in net assets and an expense ratio of 0.60%. Its top five holdings are Delta Air Lines (DAL), 10.20%; Southwest Airlines (LUV), 9.91%; United Airlines Holdings (UAL), 9.63%; American Airlines Group (AAL), 8.14%; and JetBlue Airways (JBLU), 4.30%.
The airlines are using artificial intelligence (AI) to improve the paths of their flights to save time and money with reduced fuel costs, Holmes said. The digitalization of the world is such a phenomenon that it is affecting “every dimension” of our lives, he added.
Companies like the airlines are adapting quickly and going away from the hub structure to a new strategy to transport tourists rather than business travelers, Holmes said.
Investors looking to ride the expected rebound once a Covid-19 vaccine is available may want to consider investing in JETS. The dividend-paying airline fund could prove to be a shrewd way to gain a stake in the airline industry with a single investment.
