Jets Etf: Worth The Investment Risk?

The U.S. Global Jets ETF (JETS) is an exchange-traded fund that provides investors with broad exposure to the industrials transportation/shipping segment of the equity market. It is a passively managed fund launched in 2015 that tracks the performance of airline companies across the globe, with an emphasis on domestic passenger airlines. JETS has a high expense ratio of 0.60% and is considered a high-risk investment choice due to its beta of 1.48 and standard deviation of 40.87%. While it offers diversified exposure to the air travel industry, its asset allocation has been criticised for being weighted towards riskier, less successful companies.

JETS ETF's performance and risk

As of October 2020, the U.S. Global Jets ETF (JETS) had lost about 45.50% year-to-date and was down about 38.23% over the last 12 months. The ETF traded between $12 and $32.27 in the past 52-week period.

JETS has a beta of 1.48 and a standard deviation of 40.87% for the trailing three-year period, indicating a high-risk choice. With about 40 holdings, it has more concentrated exposure than peers.

As of November 2022, JETS's performance over one year was -25.2%. It has an expense ratio of 0.60%, an annual dividend yield of 0.04%, and a three-month average daily volume of 6,359,474. Its assets under management were $2.1 billion.

In June 2020, the JETS ETF's share price surged 67% over three weeks, rising from around $12 to just over $20. However, past performance is not a guarantee of future results, and upon closer examination, the ETF may not be a good investment choice.

JETS ETF's holdings

The U.S. Global Jets ETF (JETS) is an exchange-traded fund that provides investors with access to the global airline industry, including airline operators and manufacturers from around the world. It is passively managed and launched on 28 April 2015.

As of 29 November 2024, the top holdings of JETS are:

• United Airlines Holdings Inc
• American Airlines Group Inc
• Southwest Airlines Co
• Frontier Group Holdings Inc
• Alaska Air Group Inc
• Sun Country Airlines Holdings Inc
• JetBlue Airways Corp
• Air Transport Services Group Inc
• Booking Holdings Inc
• General Dynamics Corp

The top 10 holdings of JETS account for about 60-63% of total assets under management. The ETF has a beta of 1.48 and a standard deviation of 40.87% for the trailing three-year period, making it a high-risk choice in the space.

JETS ETF's fees

The U.S. Global Jets ETF (JETS) is a passively managed exchange-traded fund that provides investors with broad exposure to the global airline industry. It offers diversified exposure to airline companies, aircraft manufacturers, airports, and terminal services.

The expense ratio for JETS is 0.60%, which is on par with most peer products in the space but is considered relatively high compared to other sector-specific ETFs. The annual operating expenses for this ETF are also 0.60%.

While JETS provides a convenient way to gain exposure to the airline industry, investors should consider the fund's fees and expenses when making investment decisions. It is important to note that lower-cost products will generally produce better results than those with higher costs.

As of November 2024, the fund's net assets were over $1 billion, with a return on equity of -3.61% and a price-to-earnings ratio of 40.88. These metrics provide insights into the fund's profitability and valuation.

JETS ETF's asset allocation

The U.S. Global Jets ETF (JETS) is the only ETF focused on the airline industry. It provides investors with access to the global airline industry, including airline operators and manufacturers worldwide. The ETF's top holdings include United Airlines Holdings Inc., American Airlines Group Inc., and Delta Air Lines Inc.

As of November 3, 2022, JETS had a three-month average daily volume of 6,359,474 and assets under management of $2.1 billion. The ETF's investment strategy is to track the U.S. Global Jets Index, although it doesn't guarantee complete replication and may invest in securities not included in the index.

JETS is a multi-cap ETF, but it is predominantly weighted towards large-cap and mid-cap companies, with small-cap companies making up just over 8% of the portfolio. As of September 30, 2022, the fund allocated three-quarters of its portfolio to airlines and companies involved in the aviation industry, such as aircraft manufacturers, terminal services companies, and airports. The remaining quarter was invested in companies involved in transportation infrastructure, internet, transportation, and commercial services.

Geographically, more than three-quarters of the fund's holdings are securities domiciled in the U.S., with smaller allocations to companies in Canada, Europe, and Asia.

It's important to note that JETS has been criticised for its subpar asset allocation. Despite the benefits of diversification, some analysts argue that the ETF's assets are weighted towards riskier and less successful companies within the airline industry. Additionally, the fund charges a relatively high expense ratio of 0.60%, which is comparable to actively managed mutual funds.

JETS ETF's suitability for investors

The U.S. Global Jets ETF (JETS) is an exchange-traded fund that provides investors with broad exposure to the industrials-transportation/shipping segment of the equity market. It is passively managed and seeks to track the performance of the U.S. Global Jets Index, which is composed of U.S. and international passenger airlines, aircraft manufacturers, airports, and related companies. JETS is the only ETF focused solely on the airline industry, making it a unique investment option in this space.

JETS can be an attractive investment option for those seeking diversified exposure to the air travel industry without tying their investment to a single carrier. It offers a convenient way to gain low-risk and diversified access to a broad group of companies in the transportation and shipping sectors. The fund has amassed significant assets, currently totalling over $2 billion, indicating its popularity among investors.

However, it's important to consider that the airline industry has historically underperformed compared to broader market indices like the S&P 500. JETS has also experienced negative returns over the last year, with a one-year performance of -25.2%. Additionally, the ETF has a relatively high expense ratio of 0.60%, which is higher than many other sector-specific ETFs.

When considering investing in JETS, it's essential to evaluate the industry's outlook and individual holdings within the fund. While the airline industry has rebounded amid the recovery of global travel, it faces headwinds such as a slowing economy and high jet fuel prices. JETS's top holdings include major airlines such as United Airlines, American Airlines, and Delta Air Lines, which have significant exposure to long-haul international travel and business travel, potentially impacting their recovery trajectory.

In summary, JETS may be suitable for investors seeking specific exposure to the airline industry and related sectors. However, it's important to carefully assess the industry's prospects and conduct thorough research on the individual holdings within the ETF. Diversification within the fund may be limited, and the high expense ratio is a factor to consider when evaluating the overall investment costs.

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