Travel & Leisure ETFs Jump on Vaccine Optimism

The development in the potential coronavirus vaccine has infused strong optimism into the broader markets. This is especially true, as Moderna Inc. MRNA has inched closer to a vaccine following promising early data (read: Moderna Inches Closer to Coronavirus Vaccine: ETFs to Shine).

The data demonstrates that vaccination with mRNA-1273 elicits a robust immune response across all dose levels as it produced neutralizing antibodies in all 45 patients. In the trial, each participant received a 25, 100 or 250 microgram dose, with 15 people in each dose group. Participants received two doses of the potential vaccine. The positive result has pushed the vaccine into the phase 3 trial, which is slated to start on Jul 27. The trial will enroll 30,000 participants across 87 locations, according to ClinicalTrials.gov. Participants in the experimental arm will receive a 100 microgram dose of the potential vaccine on the first day and another dose 29 days later.

Added to the enthusiasm, the Federal Reserve’s Beige Book survey showed that U.S. businesses saw an uptick in activity in the beginning of July as states eased restrictions to contain the novel coronavirus pandemic.

Market Impact

Wall Street saw smooth trading in the Jul 15 trading session with the S&P 500 climbing nearly 1% and Dow Jones gaining 0.5%. While most of the corners were in green, investors rushed to the beaten-down sectors, including cruise lines, airlines, hotel and casino operators, and travel and entertainment-booking companies.

In fact, 20 companies in the S&P 500 gained more than 9% on the day, with a dozen of those in travel, entertainment, and hospitality businesses. The three biggest winners were cruise line companies — Royal Caribbean RCL, Norwegian Cruise Line Holdings NCLH, and Carnival Corp CCL — that gained 16% or more. In the travel industry, Liberty TripAdvisor LTRPA jumped 13.5% while Park Hotels & Resorts PK, TripAdvisor TRIP, and Marriott International MAR gained 12.9%, 9.1% and 7.9%, respectively. Further, the five airlines in the S&P 500 Index rose at least 7.5% with American Airlines AAL and United Airlines UAL leading the way higher, jumping 16% and 14.6%, respectively.

ETFs That Gained

Given this, ETFs that track stocks in these sectors jumped the most on the day. Below we have highlighted them in detail below:

U.S. Global Jets ETF JETS – Up 7.7%

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 40 securities and charges investors 60 bps in annual fees. The fund has gathered $1.2 billion in its asset base while seeing solid trading volume of nearly 3.7 million shares a day. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook (read: Top & Flop Zones of First-Half 2020 and Their ETFs).

Invesco Dynamic Leisure and Entertainment ETF PEJ – Up 5.4%

This fund tracks the Dynamic Leisure and Entertainment Intellidex Index and holds a small basket of 32 stocks. From an industry look, broadcasting and airlines take the largest share at 26.2% and 21.2%, respectively, while restaurants & bars round off the next spot with double-digit exposure. The ETF has amassed $232.9 million in its asset base and trades in average daily volume of 209,000 shares. PEJ charges 63 bps in annual fees and has a Zacks ETF Rank #4 with a High risk outlook (read: Jobs Market Strengthening Fast: 4 Sector ETFs & Stocks to Buy).

ETFMG Travel Tech ETF AWAY – Up 4.4%

This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 29 stocks in its basket with travel bookings & reservations companies accounting for 45% of assets, followed by 19.3% share in riding sharing & hailing firms. AWAY has accumulated $8.3 million in its asset base and trades in average daily volume of 13,000 shares.

SPDR S&P Transportation ETF XTN – Up 4.3%

This fund targets the broad transportation sector and tracks the S&P Transportation Select Industry Index. It holds 42 stocks in its basket with 36% of the portfolio is dominated by trucking and air freight & logistics, and airlines take 25.2% and 22% share, respectively. With AUM of $195.2 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 46,000 shares a day. It has a Zacks ETF Rank #4 with a High risk outlook.

VanEck Vectors Gaming ETF BJK – Up 4%

This ETF provides investors with exposure to companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. It follows the MVIS Global Gaming Index, holding 42 securities in its basket. The product has AUM of $46.1 million and average daily volume of roughly 31,000 shares. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

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