While travelling abroad has picked up, the sector remains highly volatile for investors
It has been a turbulent ride for the relatively new class of travel and leisure ETFs launched to capitalize on the world getting back to ‘normal’ after the havoc caused by COVID-19.
All but one U.S. travel ETF – the actively managed AdvisorShares Hotel ETF – have underperformed the S&P 500 index, notes Tiffany Zhang, an ETF analyst with National Bank Financial in Toronto. Meanwhile, the continued uncertainty among airlines has already claimed a victim: the SonicShares Airlines, Hotels, Cruise Lines ETF , which was delisted in July – barely a year after it was introduced as the first “pure-play” travel ETF.For Canadian investors, there is one homegrown travel ETF, the Harvest Travel & Leisure Index ETF , which provides broader sector exposure to the sector than U.S. funds in the space.
As with many thematic funds, TRVL has had a bumpy ride as the economy struggles to emerge from the pandemic, rising inflation and energy prices. “So the demand side of the equation is absolutely still intact and has been recovering and starting to accelerate both on volume and on increased value whether that is room rates or flight rates.”
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