🛫Why the U.S. Global Jets ETF Could Be Your Next Portfolio Wingman

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Hello, ETF UNO Flyers! The sound of jet engines and the thrill of takeoff signal the airline industry’s recovery. The U.S. Global Jets ETF $JETS ( ▼ 1.67% ) is back, allowing investors to capitalise on this rebound. As global travel continues to rise post-pandemic, this aviation-focused fund has become a popular choice for those seeking exposure to the revitalized airline sector.

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What is JETS?

The U.S. Global Jets ETF provides investors access to the global airline industry, including airline operators and manufacturers from all over the world. With 49 individual holdings, the fund's top positions include United Airlines Holdings at 11.47%, Delta Air Lines at 11.11%, American Airlines Group at 10.40%, and Southwest Airlines at 9.48%.

Launched on April 28, 2015, JETS tracks the U.S. Global Jets Index and takes a passive management approach to provide comprehensive exposure to the airline ecosystem. The bulk of its holdings are in North American securities, with smaller allocations to companies in Europe, Asia and Latin America. Think of it as your all-access pass to the engines of global mobility.

The airline industry has made a remarkable recovery since the pandemic. In 2023, global air travel reached 94% of the levels seen in 2019. Looking ahead to 2025, we expect passenger demand and capacity to surpass pre-pandemic benchmarks, potentially breaking records.

Airlines are not just recovering; they are innovating. Sustainable aviation fuels (SAF) and lightweight materials are transforming the industry, while AI-driven tools enhance efficiency across various operations, from fuel usage to customer service.

The airline industry in 2025 presents a compelling investment narrative. According to the International Air Transport Association (IATA), in June 2024, global air cargo demand increased by 14.1% year-over-year, setting a record for the first half of the year. This strength in cargo, combined with recovering passenger traffic, creates a dual revenue stream for many carriers.

Investment Strategy📊

JETS isn't a "set-and-forget" ETF—it's a tactical play best used as a satellite holding within a diversified portfolio:

• 🛰️Core Satellite Approach: JETS works exceptionally well as a satellite holding around a core portfolio of broad market ETFs. A 3-5% allocation can provide meaningful sector exposure without overwhelming portfolio risk.

• 🚀Cyclical Recovery Play: Airlines are inherently cyclical businesses that benefit from economic expansion and increasing consumer discretionary spending. JETS allows investors to capture this cyclicality without the idiosyncratic risks of individual airline stocks.

• 🛡️Inflation Hedge Characteristics: Airlines can pass through fuel costs and wage inflation to consumers through higher ticket prices, providing some natural inflation protection during economic recovery periods.

The ETF comprises holdings across airlines, aircraft manufacturers, airports, and terminal services, providing broad exposure to the aviation industry beyond just passenger carriers. Consider JETS as a tactical investment when you expect:

• 🟦Accelerated economic growth

• 🟧Rising consumer confidence

• 🟨Normalised business travel

• 🟪Stable fuel prices

JETS at a glance

ETF Issuer: U.S. Global Investors

Inception: 2015-04-28

Asset Class: Equity

Underlying Index: U.S. Global Jets Index (JETSX)

Geographical Focus: Global

Expense Ratio: 0.60% (as of last data point)

Dividend Yield: N/A (as of last data point)

Distribution Frequency: N/A

Historical Performance

JETS had a total return of 25.66% in the past year. Since the fund's inception, the average annual return has been 0.05%. This modest long-term return reflects the challenges the airline industry faced even before COVID-19, including fuel price volatility, regulatory pressures, and competitive dynamics.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Pure-Play Aviation Exposure with Diversification Benefits: JETS provides a unique investment opportunity by offering comprehensive exposure to the entire aviation ecosystem. Rather than focusing solely on individual airline stocks, JETS includes aircraft manufacturers, airport services, and supporting technology companies. This diversification minimizes the impact of any single company's challenges while maintaining sector focus.

2. Leverage to Pent-Up Travel Demand: The COVID-19 pandemic created a significant demand for travel experiences. By 2025, travellers prioritise safety, affordability, and convenience, prompting airlines to adjust their booking strategies. This shift, coupled with a renewed eagerness to travel, bodes well for the industry in the coming years.

3. Operational Efficiency Improvements: Airlines have emerged from the pandemic more efficient, with an 11% decrease in flights per route and a 4% increase in seats per departure. By using larger aircraft on some routes, airlines can offer more capacity, leading to improved profitability as demand recovers.

Top 3 Reasons Not to Invest

1. Cyclical Sensitivity and Economic Vulnerability: Airlines are sensitive to economic downturns, with stocks often losing 40% of their value in the six months before a recession, but they usually double afterwards. Revenue typically declines by 14 points at the lowest point before recovering. This volatility can pose challenges for investors with shorter time horizons or lower risk tolerance.

2. Fuel Price Volatility and External Shocks: Fluctuations in fuel prices are another key challenge airlines grapple with. Cross-border disturbances such as tensions in the Middle East and the Russia-Ukraine conflict create financial uncertainty for airline companies, further contributing to the unpredictability of oil prices. These external factors remain largely outside airlines' control.

3. Structural Changes to Business Travel: The most significant long-term risk may be permanent changes to business travel patterns. Most of the profits earned on a long-haul flight are generated by a small group of high-yielding passengers, often travelling for business. But this pool of profit-generating passengers has shrunk because of the pandemic. As remote work and video conferencing permanently reduce business travel, it could structurally impair airline profitability.

🎯Strategic aviation exposure for savvy investors

The U.S. Global Jets ETF offers investors a chance to tap into the recovering aviation industry, with air travel demand now exceeding pre-pandemic levels and airlines operating more efficiently. However, the sector's cyclicality and ongoing challenges in business travel require careful consideration.

For intermediate ETF investors, JETS is best used as a tactical allocation rather than a core holding, especially when you believe in economic growth and increased consumer spending. The fund has a 0.60% expense ratio, which is reasonable for a specialised sector ETF but higher than typical broad market options.

At ETF UNO, we're all about smart, data-driven decisions. If you're ready to explore JETS further (or debate its merits over virtual coffee), join our newsletter today. We'll send you exclusive insights, model portfolios, and the occasional travel metaphor to keep things fun.

The skies are clear, the engines are roaring, and the runway is yours. Happy investing!

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.