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Travel & Leisure ETFs Ready to Bloom in Spring

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With rapid COVID-19 vaccinations, a larger number of Americans are expected to travel this spring. The bouts of latest data coupled with positive news in the space indicate that travel demand is picking up.  

This is especially true considering the latest data from Transportation Security Administration, which shows that in the United States, more than one million passengers have consistently passed through a Transportation Security Administration (TSA) screening checkpoint in a day since mid-March. In fact, U.S. air travel set a pandemic-era record with more than 1.5 million people screened during the Easter weekend, a record since March 2020.

The announcement from the Centers for Disease Control and Prevention (CDC) that “those who are fully vaccinated against the coronavirus can safely travel in the U.S. without having to quarantine or get tested” also fueled optimism over travel demand. Per CDC, though fully vaccinated travelers are less likely to get and spread COVID-19, they must adhere to guidelines put in place by their travel destination such as potential testing requirements.

With enough supply of vaccines, President Joe Biden recently doubled the country’s coronavirus vaccination target to 200 million shots in his first 100 days in office. Biden has vowed to have enough vaccine supply to cover every American by the end of May. About 14% of the total U.S. population has been fully vaccinated, according to data from the Centers for Disease Control and Prevention. Over 130 million vaccine doses have been administered. Per NPR's vaccine tracker, 16.9% of the U.S. population is fully vaccinated, and 30% has had at least one dose. Researchers estimate that 70-85% of the country would need to have immunity for COVID-19 to stop spreading through communities (read: Travel ETFs Flying High on Vaccine Optimism).

According to data compiled by Bloomberg and The New York Times, the United States has vaccinated more people than any other country, with more than 40% of adults and 75% of more senior people having received at least one dose of COVID-19 vaccine. In total, the country has doled out more than 165 million doses as of Apr 4, and is most closely followed by China (138 million), the European Union (79 million), India (74.4 million) and the United Kingdom (36.6 million).

The United States has continued to see its vaccine rollout speed up for months, setting a one-day record of nearly 4.1 million shots on Apr 3. The average number of doses administered each day has risen to 3.08 million over the past week, leaving the United States second only to China (4.89 million), which has a population roughly four times larger in size.

Given the speedy ramp up in vaccinations, ETFs that track travel and leisure stocks are set to surge this spring. Below we have highlighted them in detail below:

U.S. Global Jets ETF (JETS - Free Report)

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 40 securities and charges investors 60 bps in annual fees. The fund has gathered $4 billion in its asset base while seeing a solid trading volume of more than 7 million shares a day. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Air Travel Demand Nears 1-Year High: ETFs to Fly High).

ETFMG Travel Tech ETF (AWAY - Free Report)

This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 31 stocks in its basket with travel bookings & reservations companies accounting for 48.6% of assets, followed by 20.1% in travel advice companies and 17.2% share in travel price comparison firms. AWAY has accumulated $317.3 million in its asset base and trades in an average daily volume of 458,000 shares.

SPDR S&P Transportation ETF (XTN - Free Report)

This fund targets the broad transportation sector and tracks the S&P Transportation Select Industry Index. It holds 41 stocks in its basket with 33% of the portfolio dominated by trucking and airlines. Air freight and logistics take 25.8% and 22.8% share, respectively. With AUM of $734.1 million, the fund charges 35 bps in fees per year from investors and trades in a good volume of around 91,000 shares a day. It has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report)

This fund tracks the Dynamic Leisure and Entertainment Intellidex Index and holds a small basket of 32 stocks. From an industry look, broadcasting, and restaurants & bars take the largest share at 24.6% and 23.8%, respectively, while casinos & gaming, and leisure & recreation round off the next two spots with double-digit exposure. The ETF has amassed $1.9 billion in its asset base and trades in an average daily volume of 860,000 shares. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook (read: 4 Sector ETFs to Sizzle on Robust March Jobs Report).

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