Some of the most talked-about investing bets of the past year aren’t the companies that benefited from the COVID-19 lockdowns or business activity going virtual. Rather, they’re the ones whose stocks stand to pop when it’s all over.
Think of the U.S. Global Jets ETF JETS, which has soared to a whopping $2.6 billion in assets, even as it weathers a bumpy ride, pardon the pun, as market sentiment toggles between optimism and gloom about the reopening of the economy and the resumption of normal life.
In the spirit of fresh starts, MarketWatch asked an expert on exchange-traded funds for some reopening recommendations that aren’t quite as concentrated as JETS, and are likely to survive, even thrive, in what’s likely to be a turbulent period through the worst of the winter and into a world where coronavirus treatments are readily available.
One of the best bets for any investor might be the Invesco Dynamic Leisure and Entertainment ETF PEJ, which owns exactly what you think it might, based on the name, noted Todd Rosenbluth, head of mutual fund and ETF research for CFRA, but in a much more approachable portfolio than the pure-play JETS.
PEJ’s holdings include companies and industries that have been smacked hard by the pandemic, like hotels, casinos, and Walt Disney Co. DIS
“Even as vaccines are rolled out, certain parts of the consumer experience will improve at different rates: people might be more inclined to go to restaurants, to maybe take a trip by car, but maybe not by plane,” Rosenbluth said. “There won’t be a straight line up in terms of consumer spending so the diversification of this fund will help.”
PEJ doesn’t just diversify in terms of business models. It also has a mixture of large, mid, and small cap stocks, as well as growth and value companies, Rosenbluth noted. A portfolio with exposure to small-caps and value stocks should benefit from greater economic improvement and cyclicality.
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