ETFMG expands thematic offering with travel tech ETF

Feb 21st, 2020 | By | Category: Equities

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ETF Managers Group (ETFMG) has launched a new thematic equity ETF in the US providing exposure to technology-focused companies operating within the global travel and tourism industry.

ETFMG Travel tech ETF

The fund invests in companies providing technology for the travel and tourism industry.

The ETFMG Travel Tech ETF (AWAY US) has listed on NYSE Arca and comes with an expense ratio of 0.75%.

Dividends are reinvested within the portfolio.

With travel and tourism representing 10.4% of global GDP in 2019, according to data from the World Travel & Tourism Council, the sector is already an economic giant in its own right.

But ETFMG believes there is still significant room for expansion, pointing to a survey from Travelport that showed one out of every three millennials is willing to spend over $5,000 on a vacation.

The ETF aims to offer a liquid, low-cost means of participating in this growth by investing in companies poised to capture the future trends of the travel and tourism industry.

Methodology

The fund is linked to the Prime Travel Technology Index, designed by Prime Indexes, an index provider focused on emerging trends within the ETF industry.

The index selects its constituents from a universe of developed or emerging market stocks with market capitalizations greater than $150 million and average daily traded volumes of at least $250,000. Stocks listed in countries that impose significant restrictions on foreign capital investment will not be eligible.

The methodology utilizes financial statements, other public filings and reports, as well as third-party industry research to identify and select firms defined as ‘Travel Technology’ companies – those that provide technology, via the internet, to facilitate travel bookings and reservations, ride-sharing and hailing, travel price comparison, and travel advice. Eligible companies may operate both direct to consumers and as providers to businesses.

Chosen constituents are weighted so as to favour stocks that are larger are more frequently traded. Each stock in the final selection list is ranked based on a combination of market capitalization and average daily trading volume. The top-three ranked securities receive an 8% weight in the index, while the next three stocks receive a weight of 6%. The residual weight (58%) is distributed amongst the remaining securities, favouring those with larger average daily trading volumes and capping individual weights at 4%.

The index is reconstituted and rebalanced semi-annually in June and December.

As of 20 February 2020, the index had just under half (47.1%) of its weight dedicated to stocks from the US, followed by Japan (10.8%), the UK (7.9%), and Spain (5.8%).

The largest individual stocks were Uber (11.2%), Booking Holdings (8.0%), Lyft (7.7%), Expedia (6.3%), Trip.com (6.0%), and Amadeus IT Group (5.8%).

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