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 Inc. (AAL), Delta Air Lines Inc. (DAL) and Southwest Airlines Co. (LUV). The industry has suffered over the past year from plunging air travel due to the COVID-19 pandemic, with regulators recently calling for rules requiring a negative virus test from prospective passengers in order to fly. For investors bullish on the prospects of an increasingly widespread vaccine helping the air travel industry make a rapid comeback, an airline ETF provides a way to get broad-based exposure to that recovery.
Key Takeaways
- Airline stocks have dramatically 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., Southwest Airlines Co., 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). JETS has dramatically underperformed the broader market with a total return of -27.9% over the past 12 months compared to the S&P 500's total return of 19.1%. The performance figure for the S&P 500 is as of February 1, while all other data are as of February 2.
U.S. Global Jets ETF (JETS)
- Performance over 1-Year: -27.9%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.04%
- 3-Month Average Daily Volume: 6,098,575
- Assets Under Management: $3.0 billion
- Inception Date: April 28, 2015
- Issuer: U.S. Global Investors
JETS is the only pure play airline ETF. This fund has 80% of its portfolio allocated to domestic airlines and companies involved in the aviation industry (aircraft manufacturers, terminal services companies, and airports), and about 20% invested in international companies. While JETS is a multi-cap ETF, it is weighted predominantly toward large-cap companies. Overall, its investment strategy seeks to track the U.S. Global Jets Index (JETSX), which is an index of airline stocks. Below, we'll 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) | 10.6% | Domestic and international carrier |
| Southwest Airlines Co. (LUV) | 10.1% | Low-cost carrier |
| Delta Air Lines Inc. (DAL) | 9.7% | Domestic and international |
| United Airlines Holdings Inc. (UAL) | 8.9% | Domestic and international |
| Allegiant Travel Co. (ALGT) | 4.4% | Low-cost carrier |
| Spirit Airlines Inc. (SAVE) | 4.3% | Low-cost carrier |
| Alaska Air Group Inc. (ALK) | 4.2% | Domestic airline |
| JetBlue Airways Corp. (JBLU) | 4.0% | Low-cost carrier |
| Cargojet Inc. (CJT) | 3.2% | Canada-based cargo airline |
| Air Canada (AC:TSE) | 3.2% | Canada-based domestic and international airline |
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Article Sources
Reuters. "U.S. 'actively looking' at mandating COVID-19 testing for domestic air travel." Accessed Feb. 2, 2021.
YCharts. "Financial Data." Accessed Feb. 2, 2021.
ETFdb.com. "ETF Screener." Accessed Feb. 2, 2021.
U.S. Global Investors. "U.S. Global Jets ETF – Overview." Accessed Feb. 2, 2021.
ETFdb.com. "U.S. Global Jets ETF." Accessed Feb. 2, 2021.
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