July 6, 2022

A first-of-its-kind investment in travel

“Solactive will market weight it across the 30 stocks, and then, if one gets to a maximum…

A first-of-its-kind investment in travel

“Solactive will market weight it across the 30 stocks, and then, if one gets to a maximum weighting of 10{d54a1665abf9e9c0a672e4d38f9dfbddcef0b06673b320158dd31c640423e2e5}, they will rebalance semi-annually to the market cap in the index,” Kovacs explains. “It is fairly index mechanical in that way. There is no subjectivity – it is based on the market cap of these various subsectors of the industry.” 

Those five subsectors include airlines, cruise companies, intermediaries like Expedia, resorts and casinos, and hotels.  

“We did see opportunities in the sector,” Kovacs says. “Across these five different areas, a couple, like hotels and resorts/casinos, have come back quicker. Some areas, like cruise lines, we don’t expect back to full capacity until 2023, and airlines later this year. I think by the time we get to 2023, we will see a good rebound across all the areas. In setting up the fund, we wanted to position ourselves across these five subsectors and develop an index-based fund with 30 different stocks.”  

Harvest believes this ETF is the first of its kind worldwide to offer truly diversified travel exposure. Kovacs notes that while there are some travel-sector funds in the US, this is the first one diversified across the five subsectors.  

“From our research, this seems to be the only one of its kind that is this diversified,” he says. “We feel very fortunate. When it started trading, it was getting good activity and inquires. The concept is a natural for people to think about: travel, flights, cruises, hotels – something everyone is looking forward to doing again.”