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5 ETFs to Make the Most of July Fourth Celebrations
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Thanks to a booming economy, solid employment, and growing consumer confidence, more Americans will binge on travel and barbecue this Fourth of July.
AAA estimates that a record 46.9 million Americans will travel 50 miles or more during the holiday weekend (Jul 3-8), up 5% from last year. Of them, 39.7 million will go on a road trip, 3.8 million will fly, and 3.5 million will travel by train and other modes (including buses and cruises).
Though road trip is expected to rise 5.1% over last year, motorists are expected to pay a higher gas price than last year but less than what they paid for Memorial Day this year. Gas prices peaked at $2.97 per gallon nationwide during the Memorial Day weekend and have since then lowered to a $2.87 per gallon national average. The prices are also well below the $3.60 average from Independence Day 2014.
Additionally, travelers taking to the skies will pay an average $171 for a round-trip flight on the top 40 domestic routes, per AAA’s Leisure Travel Index. This is the lowest Independence Day airfare in five years, and 9% lower than last year.
However, travelers’ wallets will feel the pinch when paying for car rentals, and most mid-range hotels. The average daily cost of a car rental is 2% higher than last year, while the average nightly rate at AAA Two Diamond hotels is 11% more at $147 and AAA Three Diamond hotels is 2% more at $187 (read: Will Consumer ETFs Lose Momentum on Trump Tariffs).
Apart from one of the busiest holidays, Independence Day also marks the beginning of the busiest half of the year for retailers. Many retailers are already flashing exciting deals for July Fourth and massive discounts are in the cards for the day. According to the National Retail Federation (NRF), 216 million Americans plan to celebrate Independence Day this year with total spending of $6.91 billion, down from 219 million last year. Though the number of consumers may be down due to the holiday falling in mid-week, it presents retailers with a great opportunity to boost sales. Spending per household nevertheless is estimated to grow 2.6% to $75.35 on food for cookouts and barbecues.
That said, this Fourth July will be a celebration of not only freedom, but also economic growth. Along with the spirits of Americans, this Independence Day should lift revenues and profits in various corners. Industries like transportation, lodging, hotel, restaurants, food and retail will benefit the most. Investors seeking to tap the fanfare could ride on these industries through the following ETFs (read: Top-Ranked Sector ETFs to Buy for Q3).
iShares Dow Jones Transportation Average Fund (IYT - Free Report)
The ETF provides exposure to the broad transportation sector by tracking the Dow Jones Transportation Average Index. It holds a small basket of 20 stocks with heavy concentration on FedEx (FDX). Air freight and logistics takes the top spot with 29.1% share in the basket, while railroads (27%), trucking (18.8%) and airlines (17.9%) round off the next three. The fund has accumulated nearly $828.7 million in AUM and charges 44 bps in fees per year from investors. While the fund currently has a Zacks ETF Rank #4 (Sell), it is expected to get a near-term boost from the July Fourth holiday (read: Winning and Losing Sectors ETFs Post OPEC Decision).
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 34 securities that are heavily concentrated on the top four firms with a double-digit allocation each. Other firms hold no more than 4.13% share. The fund has gathered $92.5 million in its asset base. It charges investors 60 bps in annual fees but carries a Zacks ETF Rank #4 with a High risk outlook, underscoring that some pain might be in store though the event will definitely provide some relief (read: Will the Airline ETF Crash on Oil Price Jump?).
This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on the top firm at 21.1% while other firms hold less than 8.5% share. The ETF has a certain tilt toward specialty retail and Internet & direct marketing that collectively make up for more than half of the portfolio. The product has amassed $87.3 million in its asset base and charges 35 bps in annual fees. RTH has a Zacks ETF Rank #3 (Hold) with a Medium 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 29 stocks. It is pretty well spread out across various securities as none accounts for more than 5.11% of total assets. From an industry look, restaurants and casinos & gaming take the largest share at 24% and 21%, respectively, followed by airlines 15%) and hotels & leisure facilities (13%). The ETF has amassed $144 million in its asset base and has 0.61% in expense ratio. PEJ has a Zacks ETF Rank #3 with a High risk outlook.
The fund targets the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 104 securities in its basket that are well spread out across components as each security holds less than 2.8% of the assets. Within the sector, specialty retail takes the top spot at 27.5% of the total, followed by double-digit allocations to hotel restaurants & leisure, household durables and auto components. The product has attracted $108.3 million in AUM, while charging 29 bps in annual fees. It has a Zacks ETF Rank #2 (Buy) with a High risk outlook (see: all the Consumer Discretionary ETFs here).
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5 ETFs to Make the Most of July Fourth Celebrations
Thanks to a booming economy, solid employment, and growing consumer confidence, more Americans will binge on travel and barbecue this Fourth of July.
AAA estimates that a record 46.9 million Americans will travel 50 miles or more during the holiday weekend (Jul 3-8), up 5% from last year. Of them, 39.7 million will go on a road trip, 3.8 million will fly, and 3.5 million will travel by train and other modes (including buses and cruises).
Though road trip is expected to rise 5.1% over last year, motorists are expected to pay a higher gas price than last year but less than what they paid for Memorial Day this year. Gas prices peaked at $2.97 per gallon nationwide during the Memorial Day weekend and have since then lowered to a $2.87 per gallon national average. The prices are also well below the $3.60 average from Independence Day 2014.
Additionally, travelers taking to the skies will pay an average $171 for a round-trip flight on the top 40 domestic routes, per AAA’s Leisure Travel Index. This is the lowest Independence Day airfare in five years, and 9% lower than last year.
However, travelers’ wallets will feel the pinch when paying for car rentals, and most mid-range hotels. The average daily cost of a car rental is 2% higher than last year, while the average nightly rate at AAA Two Diamond hotels is 11% more at $147 and AAA Three Diamond hotels is 2% more at $187 (read: Will Consumer ETFs Lose Momentum on Trump Tariffs).
Apart from one of the busiest holidays, Independence Day also marks the beginning of the busiest half of the year for retailers. Many retailers are already flashing exciting deals for July Fourth and massive discounts are in the cards for the day. According to the National Retail Federation (NRF), 216 million Americans plan to celebrate Independence Day this year with total spending of $6.91 billion, down from 219 million last year. Though the number of consumers may be down due to the holiday falling in mid-week, it presents retailers with a great opportunity to boost sales. Spending per household nevertheless is estimated to grow 2.6% to $75.35 on food for cookouts and barbecues.
That said, this Fourth July will be a celebration of not only freedom, but also economic growth. Along with the spirits of Americans, this Independence Day should lift revenues and profits in various corners. Industries like transportation, lodging, hotel, restaurants, food and retail will benefit the most. Investors seeking to tap the fanfare could ride on these industries through the following ETFs (read: Top-Ranked Sector ETFs to Buy for Q3).
iShares Dow Jones Transportation Average Fund (IYT - Free Report)
The ETF provides exposure to the broad transportation sector by tracking the Dow Jones Transportation Average Index. It holds a small basket of 20 stocks with heavy concentration on FedEx (FDX). Air freight and logistics takes the top spot with 29.1% share in the basket, while railroads (27%), trucking (18.8%) and airlines (17.9%) round off the next three. The fund has accumulated nearly $828.7 million in AUM and charges 44 bps in fees per year from investors. While the fund currently has a Zacks ETF Rank #4 (Sell), it is expected to get a near-term boost from the July Fourth holiday (read: Winning and Losing Sectors ETFs Post OPEC Decision).
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 34 securities that are heavily concentrated on the top four firms with a double-digit allocation each. Other firms hold no more than 4.13% share. The fund has gathered $92.5 million in its asset base. It charges investors 60 bps in annual fees but carries a Zacks ETF Rank #4 with a High risk outlook, underscoring that some pain might be in store though the event will definitely provide some relief (read: Will the Airline ETF Crash on Oil Price Jump?).
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on the top firm at 21.1% while other firms hold less than 8.5% share. The ETF has a certain tilt toward specialty retail and Internet & direct marketing that collectively make up for more than half of the portfolio. The product has amassed $87.3 million in its asset base and charges 35 bps in annual fees. RTH has a Zacks ETF Rank #3 (Hold) with a Medium 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 29 stocks. It is pretty well spread out across various securities as none accounts for more than 5.11% of total assets. From an industry look, restaurants and casinos & gaming take the largest share at 24% and 21%, respectively, followed by airlines 15%) and hotels & leisure facilities (13%). The ETF has amassed $144 million in its asset base and has 0.61% in expense ratio. PEJ has a Zacks ETF Rank #3 with a High risk outlook.
Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report)
The fund targets the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 104 securities in its basket that are well spread out across components as each security holds less than 2.8% of the assets. Within the sector, specialty retail takes the top spot at 27.5% of the total, followed by double-digit allocations to hotel restaurants & leisure, household durables and auto components. The product has attracted $108.3 million in AUM, while charging 29 bps in annual fees. It has a Zacks ETF Rank #2 (Buy) with a High risk outlook (see: all the Consumer Discretionary ETFs here).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>