Defiance launches hotels, airlines, and cruises ETF

Jun 9th, 2021 | By | Category: Equities

Defiance ETFs has launched a new thematic equity ETF in the US which becomes the market’s second in less than a month to target stocks from the global travel industry.

Sylvia Jablonski, co-Founder and Chief Investment Officer of Defiance ETFs

Sylvia Jablonski, co-Founder and Chief Investment Officer of Defiance ETFs.

The Defiance Hotel, Airline, and Cruise ETF (CRUZ US) has listed on NYSE Arca and comes with an expense ratio of 0.45%.

The fund offers investors a targeted play on a potential rebound in travel stocks by investing in companies operating within the hotel, airline, and cruise line industries.

The travel industry has become a popular focus for the reopening trade recently as investors seek to capitalize on the global vaccine rollout and the lifting of restrictions around the world.

Sylvia Jablonski, co-Founder and Chief Investment Officer of Defiance ETFs, said: “The travel reopening trade is here. With a resurgence of travelers over Memorial Day weekend, Americans finally experienced life away from quarantine and back to the beach. Demand for travel-related services is expected to increase over the course of summer which should significantly benefit airline, cruise line, and hotel stocks.”

The fund is linked to the BlueStar Global Hotels, Airlines, and Cruises Index which selects its constituents from a global universe of stocks with market capitalizations above $150 million and average daily trading volumes greater than $1m.

The methodology screens for companies that derive at least 50% of their revenue or operating income from three travel-related industries: passenger airlines, hotels and resorts (excluding motel chains), and cruise liners. Existing constituents can see their percentage of revenue derived from these industries fall as low as 25% before they are removed from the index.

Constituents are weighted by market capitalization while capping the weight of any single stock at 8% and the weight of each of the three travel industries at 50%.

As of 9 June, the index contained 43 constituents with less than half (44.8%) of the total weight allocated to stocks from the US with the next largest country exposures being Panama (7.3%), Japan (6.2%), the UK (6.2%), and Ireland (5.8%). Stocks from the industrials and consumer discretionary sectors each account for roughly half of the total index weight.

Notable positions included Marriott International (7.6%), Hilton Worldwide (7.5%), Carnival (7.0%), Delta Air Lines (6.4%), Southwest Airlines (6.0%), and RyanAir (5.8%).

The fund’s launch comes just two weeks after SonicShares, a new thematic ETF issuer, debuted the SonicShares Airlines, Hotels, Cruise Lines ETF (TRYP US) on NYSE Arca. This fund, which comes with an expense ratio of 0.75%, provides very similar exposure as described above by tracking the Solactive Airlines, Hotels, Cruise Lines Index.

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