Escape with a travel and leisure ETF
Here's an ETF that will make you nostalgic: of the pre pandemic world: the iShares STOXX 600 Travel & Leisure (EXV9). This ETF contains companies in the travel and leisure sector. The main holdings are Flutter Entertainment (21%), Evolution Gaming Group (17%), Entain (8%), Intercontinental Hotels (8%), Ryanair (7%), Whitbread (6%), Sodexo (5%), International Consolidated Airlines (4%), and Accor (4%)
It is worth noting that gambling companies overweighted the portfolio, which is due to the higher performance of this sub-sector since the COVID crisis, notably Evolution Gaming Group which took 460%. Also included are hotel groups, restaurants and airlines. This ETF tends to underperform the STOXX Europe 600, but has caught up well with its benchmark after the markets fell in March 2020. Since the beginning of 2021, the ETF has had a performance of 25%, compared to 10% for the STOXX Europe 600. If a recovery in tourism is forthcoming, this ETF could continue to outperform the market. Note however that it has a sector risk due to the current context: it is up to you to see if you believe in a recovery of the sector or not.
Comparison of the ETF to the STOXX Europe 600, since January 2020 and January 2021
Exposure to the logistics of online trade in 2020
Online trade accounted for 20% of all retail trade in the world, according to the UNCTAD study published on 3 May, after 14% in 2018 and 16% in 2019. A basic trend accentuated by the coronavirus, but a basic trend above all. This rate even reaches 25% in China and Korea, and exceeds 23% in the UK. The development of e-commerce requires large and complex logistics chains and it is illusory to think that calls for relocation will concern all sectors of activity.
An investor seeking exposure to this complex web can focus on several sectors. A player in maritime transport, for example (Hapag-Lloyd), or a specialist in commercial warehouses (Warehousesde Pauw). But why not a supplier of technology (Ocado) to these same warehouses, or an overland carrier (DSV)?
But it is also possible to use an ETF. Legal & General's ETF dedicated to e-commerce logistics, for example.Tthe L&G Ecommerce Logistics UCITS allows exposure to 39 stocks in the sector for a fair fee of 0.49%. Denominated in dollars, this good-sized ETF ($520m in assets) tracks the Solactive Ecommerce Logistics NTR index.
It is highly internationalised, which seems logical, and its main holdings are Nippon Yusen, Vipshop, Ryder System, Kerry Logistics, Sinotrans , A.P. Møller - Mærsk , Kuehne + Nagel and XPO Logistics. E-commerce vendors (Alibaba, Amazon .com, Zalando , Rakuten, etc. ) are also included, but to a lesser extent. The ETF has gained just over 10% this year and 70% in three years.
The composition of the L&G Ecommerce Logistics ETF as of March 31, 2021 (source: L&G)
An ETF for pet lovers
Some 70% of American households have a small companion. Pet Care ETF includes 27 companies related to the well-being of pets: from care to food to accessories. It offers a basket of stocks to take advantage of this growing trend over the past 20 years. The tracker is geographically concentrated in the US, and includes companies such as Chewy, Nestlé and Colgate-Palmolive. Over a sliding year, the ETF is up 85%.
The ETF's 10 largest holdings, source: proshares.com
Biotechnology, a sector that is not in crisis
Today, we wanted to analyse the biotechnology sector, which has been very fashionable since it has been working at a frantic pace to find vaccines to fight the coronavirus. Biotech companies are coveted by the pharmaceutical industry, as they are a source of innovation, and the M&A market is very active, with leading biotechs being highly sought after: they allow large laboratories to expand their portfolios and find new growth drivers. However, the sector is highly speculative, as the valuations of many small companies, which are making structural losses, are correlated with the quality of their clinical results.
To diversify risk as much as possible without betting everything on a single promising player, why not invest in the iShares Nasdaq US Biotechnology? This ETF offers diversified exposure to US biotechnology and pharmaceutical companies listed on the NASDAQ. As a result, it has 90% exposure to the US, 2.6% to the UK, 2.49% to China and 1.26% to Germany. It allows to express a sectorial opinion.
iShares Nasdaq US Biotechnology price performance in USD :
The main positions of iShares Nasdaq US Biotechnology in USD: