Natureboy1
5 years ago
U.S. Global Investors Announces Record Inflows into Its Airlines ETF, the U.S. Global Jets ETF (JETS)
Source: GlobeNewswire Inc.
U.S. Global Investors, Inc. (NASDAQ: GROW) (the βCompanyβ) is pleased to announce significant inflows into its U.S. Global Jets ETF (JETS), with assets under management (AUM) jumping more than $250 million in the first quarter of 2020, from $52 million at the end of 2019 to $302 million as of March 31. Total AUM in the Company complex rose approximately 20 percent for the quarter.
JETS reached another exciting new milestone recently. Daily trading volume for the airlines ETF crossed above 5 million shares for the first time ever on March 25. This represents a substantial increase from the same time a year earlier, when daily volume was approximately 11,700 shares. As of April 2, the average 30-day trading volume for JETS was 2 million.
Airlines Critical to the U.S. and Global Economy
As most equity share prices have dropped, deep-value investors and hedge funds have sought discounted exposure to airlines, an industry that most consider essential in todayβs interconnected world. Some 2 million passengers flew every day in and out of U.S. airports in 2019, according to the Federal Aviation Administration (FAA). The industry also employs approximately 10 million U.S. workers, either directly or indirectly.
The industry has historically been affected by external event like oil crises, terrorist attacks and currently the coronavirus, but we believe it will be among the first to rebound once the economy recovers following the COVID-19 crisis.
Domestic carriers are now flying only approximately 200,000 passengers per days, or 90 percent fewer people than before. Politicians know that the industry is critical in turning around the U.S. economy. Thatβs why, on March 27, Congress approved and President Donald Trump signed into law a $2.2 trillion stimulus package with $58 billion in earmarked liquidity for coronavirus-hit domestic airlines. The assistance is split evenly between loans and payroll grants.
JETS is currently the only pure-play airline industry investment product on the market. It is a smart-beta, rules-based ETF that provides access to not only global carriers, but also airport operators and aircraft manufacturers.
While the ETF closed at $12.66 per share on April 2, down more than 60 percent from its 52-week high on January 17 of this year, the airlines ETF has attracted record fund flows contrary to what most investors might think. These inflows appear to be by contrarian deep-value investors that are betting that the current depressed airline industry values will rebound following the coronavirus crisis. As 18th century British nobleman and banker Baron Rothschild is credited with saying: βThe time to buy is when thereβs blood in the streets.β
Air Travel Has Been Resilient to Economic Shocks, Volatile in the Short Term
Air travel has proved to be remarkably resilient to external shocks over the decades, whether they be oil crises, wars, terrorist attacks or pandemics. In the short term, the industry is expected to be volatile.
Such events may have temporarily halted the increase in the number of passengers that take to the skies every year, but once the crisis was behind us, growth tended to resume. In 2018, the most recent year of data, the number of people who traveled at least once by plane hit an incredible 4.3 billion. We expect this number to continue to growβperhaps not in the near term, but in the years to come. Thatβs especially the case as the size of the global middle class continues to expand.
Please consider carefully a fundβs investment objectives, risks, charges and expenses. For this and other important information, obtain a statutory and summary prospectus by visiting www.usglobaletfs.com. Read it carefully before investing.
Past performance does not guarantee future results.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the fund. Brokerage commissions will reduce returns. Because the fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. The fund is non-diversified, meaning it may concentrate more of its assets in a smaller number of issuers than a diversified fund. The fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for investments in emerging markets. The fund may invest in the securities of smaller-capitalization companies, which may be more volatile than funds that invest in larger, more established companies. The performance of the fund may diverge from that of the index. Because the fund may employ a representative sampling strategy and may also invest in securities that are not included in the index, the fund may experience tracking error to a greater extent than a fund that seeks to replicate an index. The fund is not actively managed and may be affected by a general decline in market segments related to the index. Airline companies may be adversely affected by a downturn in economic conditions that can result in decreased demand for air travel and may also be significantly affected by changes in fuel prices, labor relations and insurance costs.
Smart beta refers to a type of exchange-traded fund (ETF) that uses a rules-based system for selecting investments to be included in the fund portfolio.
Distributed by Quasar Distributors, LLC. U.S. Global Investors is the investment adviser to JETS.
All opinions expressed and data provided are subject to change without notice. Opinions are not guaranteed and should not be considered investment advice.
Contact:Joseph GuyerU.S. Global Investors, Inc.jguyer@usfunds.com210.308.1221
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air-travel-proved-resilient-external-shocks-03192020
Joseph Guyer
U.S. Global Investors, Inc.
210.308.1221
jguyer@usfunds.com