The Best (and Only) Airline ETF for Q4 2022

Investing News

An airline exchange-traded fund (ETF) can provide diversified exposure to the air travel industry, including aircraft manufacturers, airline operators, airports, and terminal services. The U.S. airline industry includes major carriers such as American Airlines Group Inc. (AAL), Delta Air Lines Inc. (DAL), and Southwest Airlines Co. (LUV).

The industry has begun to recover from more than a year of pandemic-related declines in travel volume, although the process has been slow. The International Air Transport Association forecasted in October that the global airline industry would continue to lose money in 2022, although losses are expected to narrow by about 78% to $12 billion for the year. For investors optimistic about the industry’s long-term recovery, an airline ETF provides a way to get broad-based exposure to that trend.

Key Takeaways

  • Airline stocks have underperformed the broader market over the past year.
  • The best (and only) airline ETF is JETS.
  • The fund’s top holdings are American Airlines Group Inc., United Airlines Holdings Inc., and Delta Air Lines Inc.

There is only a single option when it comes to ETFs focused on the airline industry: the U.S. Global Jets ETF (JETS). The airline industry has underperformed compared to the S&P 500 in the past year. The benchmark S&P 1500 Airlines Industry Index has provided total returns of 26.6%, below the S&P 500’s 32.1% over the same period. Note that this index includes only U.S. companies and is not a perfect metric for JETS, which has a global focus. These performance figures and all data below are as of Nov. 11, 2021.

  • Performance Over One-Year: 20.8%
  • Expense Ratio: 0.60%
  • Annual Dividend Yield: 0.04%
  • Three-Month Average Daily Volume: 6,589,220
  • Assets Under Management: $4.0 billion
  • Inception Date: April 28, 2015
  • Issuer: US Global Investors

JETS is the only pure play airline ETF. As of Sept. 30, 2021, the date of its most recent fact sheet, this fund has roughly 75% of its portfolio allocated to domestic airlines and companies involved in the aviation industry (aircraft manufacturers, terminal services companies, and airports) and just under 25% invested in international companies. Canada is the main foreign play, followed by Japan, Spain, and Turkey.

While JETS is a multi-cap ETF, it is weighted predominantly toward large-cap and mid-cap and companies—small-cap companies make up just 0.5% of the portfolio. Overall, its investment strategy is to track the U.S. Global Jets Index, although the fund doesn’t guarantee 100% replication and may invest in securities not included in the index. Below, we look at the top 10 holdings for this fund.

Top JETS Holdings
Company Name (Ticker) Percent of JETS Assets Description of Company
American Airlines Group Inc. (AAL) 10.5% Domestic and international carrier
United Airlines Holdings Inc. (UAL) 10.4% Domestic and international carrier
Delta Air Lines Inc. (DAL) 10.2% Domestic and international carrier
Southwest Airlines Co. (LUV) 9.6% Low-cost carrier
Hawaiian Holdings Inc. (HA) 3.2% Scheduled and charter air services for passengers, cargo, and mail
Air Canada (AC:TSX) 3.1% Canada-based domestic and international airline
SkyWest Inc. (SKYW) 3.0% Domestic regional carrier
JetBlue Airways Corp. (JBLU) 2.9% Low-cost carrier
Alaska Air Group Inc. (ALK) 2.9% Domestic airline
Allegiant Travel Co. (ALGT) 2.8% Low-cost carrier

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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