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Airline ETF Flying With Billion Dollars in AUM

U.S. Global Jets ETF JETS, the only pure-play ETF dedicated to the airline industry, has been seeing surging investor interest mainly driven by millennial day traders looking to cash in on assets hit hard by the coronavirus pandemic. Per Bloomberg, ETF inflows surged nearly 3000% in just three months, taking its AUM to more than $1 billion. The fund had only $33 million in its asset base in early March.

According to the data from Robintrack, the ETF popularity on retail investing platforms has exploded with the number of Robinhood users holding JETS surging to 30,000 this week from 500 in early March (read: Should You Buy Airline Stocks & ETF Upon Takeoff?).

Inside The Popularity

Airline stocks have been on a tear as reopening of the economy coupled with new safety measures resulted in a pick-up in travel demand. Most of the air carriers are adding back flights ahead of the peak summer travel season, indicating that air travel will gain speed this summer. In fact, most of the U.S. airlines are trading at their highest levels since mid-March.

The four biggest U.S. carriers are boosting flight schedules. United Airlines UAL will resume about 130 nonstop routes in July that were suspended when travel collapsed as the coronavirus spread rapidly while American Airlines AAL plans to operate 55% of year-ago level flights in July, up from 25% in June and 20% in May. Delta Airlines DAL is adding roughly 100 more daily flights in June versus May, including service out of its Atlanta hub and New York’s John F. Kennedy International Airport to Florida. Additionally, Southwest Airlines LUV announced summer travel sale by launching a month-long fare sale with one-way fares from $49 to $99. It will also offer double frequent flyer points to travelers who buy tickets during the sale, which covers travel between May 26 and Aug 31.

Data from the Transportation Security Administration (TSA) shows that the number of travelers that went through checkpoints has improved for six straight weeks. An average of 305,358 people went through TSA checkpoints a day during the week ended May 31, or more than triple the low of 97,799 seen during the week ended Apr 19, as the COVID-19 pandemic resulted in shelter-in-place orders and travel restrictions. The International Air Transport Association (IATA) stated that daily flights increased by 30% between Apr 21 and May 27 (see: all the Industrial ETFs here).

JETS in Focus

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 39 securities with highest concentration on the top four largest U.S. carriers, which collectively make up for nearly 45%. American firms account for 81.4% of assets while Brazil, Mexico, United Kingdom and France round off the next countries.

The ETF has gathered $1.1 billion in its asset base while sees solid trading volume of nearly 2.1 million shares a day. It charges investors 60 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

Since hitting low on Mar 23, JETS has climbed 36.9%. However, it is still down 39.1% from a year-to-date look (read: Best-Performing ETFs of Last Week).

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Southwest Airlines Co. (LUV): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
United Airlines Holdings Inc (UAL): Free Stock Analysis Report
American Airlines Group Inc. (AAL): Free Stock Analysis Report
U.S. Global Jets ETF (JETS): ETF Research Reports
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