U.S. Global Investors Announces Record Inflows into Its Airlines ETF, the U.S. Global Jets ETF (JETS)
April 06 2020 - 9:19AM
U.S. Global Investors, Inc. (NASDAQ: GROW) (the “Company”) is
pleased to announce significant inflows into its U.S. Global Jets
ETF (JETS), with assets under management (AUM) jumping more than
$250 million in the first quarter of 2020, from $52 million at the
end of 2019 to $302 million as of March 31. Total AUM in the
Company complex rose approximately 20 percent for the quarter.
JETS reached another exciting new milestone recently. Daily
trading volume for the airlines ETF crossed above 5 million shares
for the first time ever on March 25. This represents a substantial
increase from the same time a year earlier, when daily volume was
approximately 11,700 shares. As of April 2, the average 30-day
trading volume for JETS was 2 million.
Airlines Critical to the U.S. and Global
Economy
As most equity share prices have dropped, deep-value investors
and hedge funds have sought discounted exposure to airlines, an
industry that most consider essential in today’s interconnected
world. Some 2 million passengers flew every day in and out of U.S.
airports in 2019, according to the Federal Aviation Administration
(FAA). The industry also employs approximately 10 million U.S.
workers, either directly or indirectly.
The industry has historically been affected by external event
like oil crises, terrorist attacks and currently the coronavirus,
but we believe it will be among the first to rebound once the
economy recovers following the COVID-19 crisis.
Domestic carriers are now flying only approximately 200,000
passengers per days, or 90 percent fewer people than before.
Politicians know that the industry is critical in turning around
the U.S. economy. That’s why, on March 27, Congress approved and
President Donald Trump signed into law a $2.2 trillion stimulus
package with $58 billion in earmarked liquidity for coronavirus-hit
domestic airlines. The assistance is split evenly between loans and
payroll grants.
JETS is currently the only pure-play airline industry
investment product on the market. It is a smart-beta, rules-based
ETF that provides access to not only global carriers, but also
airport operators and aircraft manufacturers.
While the ETF closed at $12.66 per share on April 2, down more
than 60 percent from its 52-week high on January 17 of this year,
the airlines ETF has attracted record fund flows contrary to what
most investors might think. These inflows appear to be by
contrarian deep-value investors that are betting that the current
depressed airline industry values will rebound following the
coronavirus crisis. As 18th century British nobleman and banker
Baron Rothschild is credited with saying: “The time to buy is when
there’s blood in the streets.”
Air Travel Has Been Resilient to Economic Shocks,
Volatile in the Short Term
Air travel has proved to be remarkably resilient to external
shocks over the decades, whether they be oil crises, wars,
terrorist attacks or pandemics. In the short term, the industry is
expected to be volatile.
Such events may have temporarily halted the increase in the
number of passengers that take to the skies every year, but once
the crisis was behind us, growth tended to resume. In 2018, the
most recent year of data, the number of people who traveled at
least once by plane hit an incredible 4.3 billion. We expect this
number to continue to grow—perhaps not in the near term, but in the
years to come. That’s especially the case as the size of the global
middle class continues to expand.
Please consider carefully a fund’s investment objectives, risks,
charges and expenses. For this and other important
information, obtain a statutory and summary prospectus by
visiting www.usglobaletfs.com. Read it carefully before
investing.
Past performance does not guarantee future
results.
Investing involves risk, including the possible loss of
principal. Shares of any ETF are bought and sold at market price
(not NAV), may trade at a discount or premium to NAV and are not
individually redeemed from the fund. Brokerage commissions will
reduce returns. Because the fund concentrates its investments in
specific industries, the fund may be subject to greater risks and
fluctuations than a portfolio representing a broader range of
industries. The fund is non-diversified, meaning it may concentrate
more of its assets in a smaller number of issuers than a
diversified fund. The fund invests in foreign securities which
involve greater volatility and political, economic and currency
risks and differences in accounting methods. These risks are
greater for investments in emerging markets. The fund may invest in
the securities of smaller-capitalization companies, which may be
more volatile than funds that invest in larger, more established
companies. The performance of the fund may diverge from that of the
index. Because the fund may employ a representative sampling
strategy and may also invest in securities that are not included in
the index, the fund may experience tracking error to a greater
extent than a fund that seeks to replicate an index. The fund is
not actively managed and may be affected by a general decline in
market segments related to the index. Airline
companies may be adversely affected by a downturn in economic
conditions that can result in decreased demand for air travel and
may also be significantly affected by changes in fuel prices, labor
relations and insurance costs.
Smart beta refers to a type of exchange-traded
fund (ETF) that uses a rules-based system for selecting
investments to be included in the fund portfolio.
Distributed by Quasar Distributors, LLC. U.S. Global Investors
is the investment adviser to JETS.
All opinions expressed and data provided are subject to change
without notice. Opinions are not guaranteed and should not be
considered investment advice.
Contact:Joseph GuyerU.S. Global Investors,
Inc.jguyer@usfunds.com210.308.1221
- air-travel-proved-resilient-external-shocks-03192020
Joseph Guyer
U.S. Global Investors, Inc.
210.308.1221
jguyer@usfunds.com
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