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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). While the industry has suffered this year from plunging air travel due to the COVID-19 pandemic, there is hope that a highly-effective vaccine will soon be authorized and ready for distribution. For investors bullish on the prospects of an approved 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 underperformed the broader market over the past year.
- The best (and only) airline ETF is JETS.
- The fund’s top holdings are Southwest Airlines Co., Delta Air Lines Inc., and United Airlines Holdings 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 -37.0% over the past 12 months compared to the S&P 500’s total return of 17.9%. The performance figure for the S&P 500 is as of November 11, while all other data are as of November 12.
- Performance over 1-Year: -37.0%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 1.93%
- 3-Month Average Daily Volume: 5,230,903
- Assets Under Management: $2.2 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 |
| Southwest Airlines Co. (LUV) | 10.3% | Low-cost carrier |
| Delta Air Lines Inc. (DAL) | 10.0% | Domestic and international |
| United Airlines Holdings Inc. (UAL) | 9.6% | Domestic and international |
| American Airlines Group Inc. (AAL) | 8.6% | Domestic and international |
| Cargojet Inc. (CJT) | 4.6% | Canada-based air cargo services company |
| Allegiant Travel Co. (ALGT) | 4.2% | Low-cost carrier |
| JetBlue Airways Corp. (JBLU) | 4.1% | Low-cost carrier |
| Alaska Air Group Inc. (ALK) | 3.8% | Domestic airline |
| Air Canada (AC:TSE) | 3.7% | Canada-based domestic and international airline |
| SkyWest Inc. (SKYW) | 3.6% | Domestic and international |
