SonicShares, a new ETF issuer focused on thematic investing, has launched its debut fund – the SonicShares Airlines, Hotels, Cruise Lines ETF (TRYP US).
The fund provides exposure to three main segments of the global travel industry: airlines, hotels, and cruise lines.
Listed on NYSE Arca, the fund provides exposure to companies operating in the global travel industry.
It has been brought to market in partnership with private-label platform Tidal ETF Services.
Travel and tourism represented over 10% of global GDP in 2019, according to data from the World Travel & Tourism Council, but ground to a halt in 2020 due to the Covid-19 pandemic with travel stocks bearing the brunt of the market’s sell-off.
However, as the global vaccine rollout continues and restrictions are lifted around the world, SonicShares believes massive pent-up demand for travel will be unleashed. The ETF offers investors a targeted play on companies benefitting from this potential rebound.
Paul Somma, Founder of SonicShares, said: “Prior to the pandemic, global travel and tourism enjoyed unprecedented annual growth as travelers across the globe recognized the value of experiences over the consumption of goods. Unfortunately, the pandemic put this trend on hold. As the pandemic recedes, travelers the world over appear eager to get back on the road, and investors can participate in this potential travel rebound with TRYP.”
The fund gains its exposure to the global travel industry by tracking the Solactive Airlines, Hotels, Cruise Lines Index which selects its constituents from a universe of global stocks with market capitalizations greater than $2 billion and average daily trading volume above $1 million.
The methodology uses the FactSet Revere Business Industry Classification System, as well as an analysis of company business descriptions, to identify firms linked to the airline, hotels, and cruise lines industries.
Companies are ranked by market capitalization within each of the three categories and the largest three firms within each category receive weights of 4.5% each. The remaining stocks are then weighted by market capitalization subject to a single stock cap of 4%. The index is reconstituted and rebalanced semi-annually in June and December.
As of 21 May, the index contained 61 constituents. Stocks from the US accounted for nearly two-thirds (64.5%) of the total weight with the next-largest country exposures being the UK (13.1%), Spain (4.5%), and Japan (4.0%). Airline and hotel companies accounted for the largest allocation with weights of 45% and 40%, respectively, with cruise line companies making up the balance.
Notable positions included SouthWest Airlines, Carnival Corp, HuaZhu Group, International Consolidated Airlines, Hilton Worldwide, Royal Caribbean Cruises, Norwegian Cruise Line, Delta Air Lines, United Airlines, and Marriott International.
The fund comes with an expense ratio of 0.75%. Income is accumulated within the portfolio.
Investors seeking to access the travel theme may also wish to consider ETFs from AdvisorShares and ETFMG.
The recently launched AdvisorShares Hotel ETF (BEDZ US) is actively managed and invests in US-listed securities, including ADRs, of companies operating hotels as well as those in related travel industries such as holiday resorts and cruises. It comes with an expense ratio of 0.79%.
The ETFMG Travel Tech ETF (AWAY US), meanwhile, launched just days before the Covid-19 market sell-off in February 2020. The fund has, however, seen a surge of interest recently from investors looking to play the reopening trade and currently houses over $330m in assets. It tracks the Prime Travel Technology Index which comprises technology-enabled companies operating within the global travel and tourism industry. The fund’s expense ratio is 0.75%.