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At Exchange: An ETF Experience 2022, U.S. Global Investors CEO and CIO Frank Holmes said that "we are spending a lot of money” on shipping, noting that “we’ve seen the cost of shipping go up sixfold.” In mid-January, U.S. Global Investors launched. Global Sea to Sky Cargo ETF (SEA ), which seeks to provide diversified access to the global sea shipping and air freight industries.
SEA is the company’s third ETF following the U.S. Global Jets ETF (JETS ), and the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU ).
Consisting of common stocks listed on developed and emerging market exchanges across the globe, SEA uses a smart-beta 2.0 strategy to determine the most efficient sea shipping and air freight companies in the world. Cargo ships represent approximately 70% of the ETF, while air freight companies represent roughly 30%.
“I really respect the law of mean reversion,” Holmes said. “So, as things have gone up, some categories exponentially, mean reversion will take place. So, I think some of these big selloffs are exponential and will probably get a big rebound here.”
When U.S. Global Investors launched SEA, Holmes told VettaFi Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange, that he “was very worried,” because the market cratered during its launch. But when U.S. Global launched SEA, pricing in the shipping industry “went up.”
“Russia invades Ukraine, and all of a sudden it goes up again, because the shipping companies have such power” to raise prices now that “they can’t fly over Russia.”
“They’re going to charge you more if you want a new car coming across the Pacific,” Holmes added. “So, I think it’s just recognizing these bounces.”
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