News, analysis and personal reflections on the markets & the financial sector

Saturday, January 31, 2009

First Airlines ETF Rolls Out

Claymore became the first-mover in yet another industry space, with the launch of the Claymore/NYSE Arca Airline ETF (NYSE Arca: FAA) on Monday. FAA is the first airlines-specific ETF to launch in the U.S.

The Claymore ETF is a pure-play modified market-cap-weighted passenger airline ETF that will be rebalanced quarterly. FAA holds 25 global airline stocks, 70% domestic and 30% international. The top three stocks in each category will be weighted 15% in the case of domestic, and 4.5% in the case of international airlines. All holdings must derive at least 50% of their business from passenger airline activity.

Some 70.1% of FAA's holdings are in U.S. stocks, with another 4.7% in Germany. The remaining markets represented, in order, are: Singapore (4.3%); France (3.7%); Ireland (2.8%); Britain (2.3%); Japan (2.2%); Canada (1.6%); Brazil (1.4%) and Australia (1.4%).

Continental is its top name, at 14.8% of assets, followed by: Southwest (11.8%); AMR (11.1%); UAL (5.5%) and Deutsche Lufthansa (5%).

The airlines industry can be a bit volatile, but as it seems to be coming out of a deep crater, some traders are betting airlines as a whole will leap out of recession and become a leader once economic times start to improve.

FAA charges 0.65%.

No comments: