Europe’s first ETF exclusively targeting companies within the global travel industry is set for its maiden voyage. TRYP / TRIP provides exposure to firms linked to the airline, hotels, and cruise lines industries. The Airlines, Hotels and Cruise Lines ETF will list on London Stock Exchange on 9 June and will be available in US dollar ( TRYP LN ) and pound sterling ( TRIP LN ) share classes.
Source: Investors check in for global travel industry ETF
It is the latest in a line of thematic equity funds being rolled out by white-label ETF provider HANetf.
Travel and tourism were some of the most beaten-down sectors of the global economy last year as Covid-19 restrictions forced millions of would-be travellers to remain at home – total spending on leisure and business travel fell roughly 50% during 2020 compared to the previous year.
There is guarded optimism, however, that international travel will grow significantly in the second half of 2021 as an increasing number of countries that have made significant progress in combatting Covid-19 open up their borders to non-citizens, helping to unleash pent-up demand.
The ETF offers investors a targeted play on companies benefitting from this potential rebound.
Hector McNeil co-Founder and co-CEO at HANetf, said: “The travel industry has been decimated after the pandemic but we are optimistic about a rebound in the short term due to the speed and extent of the Covid-19 vaccine roll-out, business travel restarting, and pent up demand resulting from trips not taken during the pandemic.
“Over the longer term, the growth of disposable income and savings, as well as the size and pace of a global economic recovery, will be key factors although it may take a few years to regain the lost ground.
“We launched the Airlines, Hotels and Cruise Lines UCITS ETF for investors who want a way to trade a recovery of the travel industry in a single product, and we are delighted to be able to launch TRYP on the London Stock Exchange later this month.”
Methodology
The fund will track 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 the end of May, the index contained 61 constituents. Stocks from the US accounted for nearly two-thirds (61.0%) of the total weight with the next-largest country exposures being the UK (11.3%), Hong Kong (7.4%), Japan (4.0%), and Ireland (3.8%). 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 ETF will come with a total expense ratio of 0.69% per annum. Income will be accumulated within the portfolio.