SAN ANTONIO, TX–U.S. Global Investors, Inc. (Nasdaq: GROW) (“the Company”), a registered investment advisory firm that focuses on specialized markets around the world, is excited to announce that its U.S. Global Sea to Sky Cargo ETF (SEA) will begin trading tomorrow, January 20, on the New York Stock Exchange (NYSE).
SEA seeks to provide diversified access to the global sea shipping and air freight industries. Consisting of common stocks listed on developed and emerging market exchanges across the globe, the ETF 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%.
SEA is the Company’s third ETF following the U.S. Global Jets ETF (JETS), launched in April 2015, and U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU), launched in June 2017. SEA represents a fusion of the Company’s longstanding experience investing in the global resources and commercial air travel industries.
Frank Holmes, the Company’s CEO and chief investment officer, says this could be an attractive time for investors to consider the shipping industry.
“After years of boom-and-bust cycles, container shipping companies today appear to have benefited greatly from favorable pricing power,” Mr. Holmes says. “At the same time that global demand has rocketed back to pre-pandemic levels much sooner than anticipated, shipping companies have exercised capacity growth discipline, as too many vessels and routes could oversaturate the market. Consequently, shipping rates have remained highly elevated through the end of 2021. The average global rate to ship a 40-foot container stood at nearly $9,300 in December 2021, a threefold increase from the same month a year earlier, according to data provided by freight marketplace operator Freightos.”
Mr. Holmes is also the Executive Chairman of HIVE Blockchain Technologies, Inc. (“HIVE”), a Canadian crypto-mining company that depends on global shipping for its mining hardware.
“In the past year, HIVE has spent millions of dollars on application-specific integrated circuit (ASIC) miners, all of them shipped from China,” Mrs. Holmes says. “This is the kind of first-hand experience that helped inspire the idea for SEA.”
Besides container shipping companies, SEA also seeks to invest in air cargo carriers, which have seen volume surge well past pre-pandemic levels. According to the International Air Transport Association (IATA), global cargo tonne-kilometers (CTKs) increased 9.4% in October 2021 compared to the same month in 2019.
SEA’s additional exposure to the air freight industry helps differentiate it from its shipping ETF peers, many of which simply track an index.
“One shipping ETF in particular, which launched in August 2021, is an indexed fund that happens not to have any exposure to air cargo,” Mr. Holmes says. “I believe that’s an oversight, as the demand for air cargo services has dramatically increased since the start of the pandemic, with consumers shifting much of their spending from services to goods.
“It’s important for investors to be aware that global trade is a long-term secular story, at the center of which is the global middle class. 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 1 billion Asians are forecast to join the middle class by 2030, according to the World Data Lab. Most of these new entrants will likely seek a middle-class lifestyle, which we expect will support shipping and logistics companies years into the future.”
To learn more about The U.S. Global Sea to Sky Cargo ETF (SEA), click here.
About U.S. Global Investors, Inc.
The story of U.S. Global Investors goes back more than 50 years when it began as an investment club. Today, U.S. Global Investors, Inc. (www.usfunds.com) is a registered investment adviser that focuses on niche markets around the world. Headquartered in San Antonio, Texas, the Company provides money management and other services to U.S. Global Investors Funds and U.S. Global ETFs.
Forward-Looking Statements and Disclosure
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a statutory and summary prospectus by visiting www.usglobaletfs.com. Read it carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the fund. Brokerage commissions will reduce returns. Because the fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. The fund is non-diversified, meaning it may concentrate more of its assets in a smaller number of issuers than a diversified fund. The fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for investments in emerging markets. The fund may invest in the securities of smaller-capitalization companies, which may be more volatile than funds that invest in larger, more established companies. The performance of the fund may diverge from that of the index. Because the fund may employ a representative sampling strategy and may also invest in securities that are not included in the index, the fund may experience tracking error to a greater extent than a fund that seeks to replicate an index. The fund is not actively managed and may be affected by a general decline in market segments related to the index. Airline companies may be adversely affected by a downturn in economic conditions that can result in decreased demand for air travel and may also be significantly affected by changes in fuel prices, labor relations and insurance costs.
Smart beta refers to a type of exchange-traded fund (ETF) that uses a rules-based system for selecting investments to be included in the fund portfolio. Positive cash flow indicates that a company is adding to its cash reserves, allowing it to reinvest in the company, pay out money to shareholders, or settle future debt payments. A tonne-kilometer is a unit of measure of freight transport which represents the transport of one tonne of goods (including packaging and tare weights of intermodal transport units) by a given transport mode over a distance of one kilometer. The Freightos Baltic Daily Index measures the daily price movements of 40-foot containers in 12 major maritime lanes. It is expressed as an average price per 40-foot container.
The outbreak of the COVID-19 pandemic and the resulting actions to control or slow the spread has had a significant detrimental effect on the global and domestic economies, financial markets and industries, including airlines. U.S. Global Investors continues to monitor the impact of COVID-19, but it is too early to determine the full impact this virus may have on commercial aviation. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material financial impact to the U.S. Global Jets ETF.
Distributed by Quasar Distributors, LLC. U.S. Global Investors is the investment adviser to SEA.
All opinions expressed and data provided are subject to change without notice. Opinions are not guaranteed and should not be considered investment advice.