With summer just around the corner, it’s an opportunity to indulge in leisure and entertainment, or more specifically, the Invesco Dynamic Leisure & Entertainment ETF (PEJ ). With the pandemic in the rearview mirrors, more travelers could make this ETF sizzle.
Memorial Day weekend may have served as an early indication of what summer travel may look like. The Transportation Security Administration (TSA) has already seen heavy numbers. So if the uptrend persists, it could be a record year.
“As expected, the Friday before the long Memorial Day weekend saw the highest TSA through-put numbers ever recorded," said Jan Freitag, national director for hospitality market analytics at CoStar. “This points to the continued demand for leisure trips on the high end and goes hand in hand with the AAA forecast for robust Labor Day traffic.”
Record travel numbers have been a year-over-year trend, as the effects of the pandemic continue to fall to the wayside.
“A lot of people are wanting to get away to sort of get that first taste of summer. But also this continues this pattern of post pandemic travel,” said Aixa Diaz, a spokeswoman for AAA. “It started off as revenge travel right after the pandemic around like 2021, 2022. But what we’ve really seen the past couple of years is that more people now are prioritizing travel.”
As far as inflation and high interest rates go, it doesn’t appear to be diminishing discretionary spending when it comes to summer travel. Inc.com that a 2024 Bank of America Summer Travel Survey. found that a majority of respondents planned to head out for the summer, especially Gen Z and millennials.
Skewed Toward Growth
PEJ tracks the Dynamic Leisure & Entertainment Intellidex Index. That index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria. Those criteria include price momentum, earnings momentum, quality, management action, and value. Its current portfolio composition skews toward growth in large-, mid-, and small-cap equities. That gives investors that potential upside from the growth factor.
Overall, the index PEJ tracks comprises common stocks of 30 U.S. leisure and entertainment companies. These are companies principally engaged in the design, production, or distribution of goods or services in the leisure and entertainment industries.
The top two holdings currently are Royal Caribbean Cruises and Hilton Worldwide Holdings. Both companies should see increased customer activity this summer. That would allow for PEJ to gain upside as travelers seek leisure and entertainment.
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