U.S. Global Investors today launched the U.S. Global Sea to Sky Cargo ETF, which is available to trade on the New York Stock Exchange. The new fund seeks to provide diversified access to the global sea shipping and air freight industries.
Frank Holmes, CEO and CIO of U.S. Global Investors, explained via email why the company launched this new ETF, and how he believes the pandemic and a growing global middle class will dramatically alter the state of shipping and logistics companies for the better.
ETF Trends: What makes now a proper time to launch a fund focused on global shipping and air freight?
Frank Holmes: As people were locked down due to the pandemic, their spending habits flipped from services to goods. This has caused a massive global supply chain imbalance that may take many months to untangle, giving shipping and logistics companies incredible pricing power.
ETF Trends: What does the breakdown between countries say about the fund’s objective?
Frank Holmes: The fund country breakdown points to the global perspective we wanted to capture in the fund. It also relates directly to a play on global purchasing managers’ index (PMI) numbers, as not only a leading indicator in this space, but a way to potentially capitalize on these trends and the growth of the global middle class.
ETF Trends: Looking at the “perfect storm” of disruptions, what is there to expect from the upcoming holiday season in relation to the fund?
Frank Holmes: We see shipping rates remaining extremely elevated through the holidays and well into 2022. This should support shares of container carriers, air freight companies, and logistics companies.
ETF Trends: What other factors are being looked at in terms of how SEA will be affected in the next few months?
Frank Holmes: The semiconductor shortage plays a key role here. Because everything uses chips today, new shipping capacity has been slow to come online, even as new orders have soared. This is contributing to the historic pricing power that shipping companies are enjoying right now.
ETF Trends: What are the long-term expectations for SEA?
Frank Holmes: So far this century, trade has steadily increased with few interruptions as the number of people classified as middle class has continued to expand, particularly in China and India. Although the pandemic has stalled household income growth in some regions, an incredible one billion Asians are forecast to join the middle class by 2030. Most of them will seek a middle-class lifestyle filled with appliances, gadgets, and more, all of which should support shipping and logistics companies years into the future.
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