Enjoy Yourself: An ETF for Travel, Leisure and Entertainment

Sometimes, investors just wanna have fun.

Think of all the things that we love to do. Go out for dinner. Hop on an airplane to an exotic location. Take a Caribbean cruise. Or just stay home and binge watch our favorite cable series.

Let’s face it. We all need to unwind and take time off from our hectic lives. There are plenty of companies that make its money by catering to consumers who just want to  get the most enjoyment out of life.

If you believe in the art of the good life, you can invest in companies that  specialize in having fun.

Meet Enjoy Yourself, a fund  that focuses on the travel and leisure industry.

Enjoy Yourself: What’s inside the fund

Enjoy Yourself is an exchange-traded fund (ETF) based on PowerShares Dynamic Leisure & Entertainment Portfolio. It trades under the ticker symbol PEJ.

Enjoy Yourself contains 30 stocks,  as of November 29, 2017. The portfolio includes some of the largest companies in travel and leisure: United Airlines, online travel booker Expedia, Norwegian Cruise Lines, and fast food restaurants including Wendy’s and McDonald’s. It also owns stock in resorts such as the Las Vegas Sands, the iconic Kentucky racetrack Churchill Downs, and cable and content conglomerate Time Warner, among others.

Although the fund is devoted to companies in the travel and leisure industry, it could help you diversify, as the stocks it holds are divided fairly evenly between small cap, mid cap, and large cap companies.

Why is that important? Different sized companies tend to perform in different ways at various points during economic cycles. For example, while one sector may experience losses, another may be growing.

Source: Invesco, as of 11/27/2017

Enjoy Yourself and the economy

Many of the companies in the fund depend on what’s known as discretionary income–that’s money consumers tend to have left over after they’ve paid for everything else that’s a necessity, including food, housing, and medical expenses. Discretionary income, as its name implies, is at the discretion of the consumer to use, and can include leisure and travel purchases.

People tend to have more discretionary income when times are good and people are working and have steady paychecks. The opposite is true when the economy hits a rough patch–discretionary spending usually falls off as well.

Spending on things like eating out, air travel, and hotel stays has increased dramatically since the financial crisis, according to reports.

Not all companies that invest in leisure depend on good economic times to fare well. Many  of the companies in the fund–Priceline and Expedia, for example–stand to benefit from the ongoing shift to online and mobile travel bookings, where growth is likely to continue almost regardless of economic climate.

Risks

All funds are subject to changing economic conditions, including inflation and recession, even a changing regulatory environment. Here’s something to keep in mind about Enjoy Yourself, with its focus on entertainment and leisure: People tend to have more discretionary income–extra money they can spend on non-essential items like vacations–when the economy is strong. Discretionary spending usually falls off when the economy hits a rough patch, which could affect the stock price of the companies represented in the fund.

This fund also focuses on a specific sector–leisure and entertainment–which means it’s not diversified the way a core portfolio fund such as Moderate Mix or Aggressive Mix might be.

Other considerations

Enjoy Yourself has an expense ratio of 0.61%. While that’s low compared to many other kinds of funds, the average expense ratio for an ETF is 0.44%, according to the Wall Street Journal. Its year to date return, as of November 29, 2017 is 8.06%. Comparable funds with similar stock holdings, including Consumer Discretionary Select Sector SPDR fund (XLY) and the Fidelity MSCI Consumer Discretionary Index ETF (FDIS)  had returns of 18.76% and 18.93% respectively for the same time period.*

Key takeaways:

  • You can invest in some of the top companies that make up the travel and leisure section with Enjoy Yourself.
  • Although the fund only has 30 stocks, it will give you broad exposure to companies that consumers turn to in order to make their leisure time more fun, including airlines, food companies, hotels, resorts, and cable providers.
  • The fund could also help you diversify from your core portfolio, as the fund is fairly evenly split between large cap, mid-cap, and small cap companies.

*Source, ETFdb.com




Source: Tradeview. Chart operates in real time, with delays. **See Footnote



Footnotes
**Charting platform used for this analysis is provided by TradingView and may be delayed. Stash does not verify any data and disclaims any obligation to do so. Stash cannot and does not represent or guarantee that any of the information available via TradingView is accurate, reliable, current, complete or appropriate for your needs.




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The PowerShares Dynamic Leisure and Entertainment Portfolio is based on the Dynamic Leisure & Entertainment Intellidex Index (a trademark of NYSE Euronext or its affiliates). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Intellidex. The Intellidex thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value. The Underlying Intellidex is comprised of common stocks of 30 U.S. leisure and entertainment companies. The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November. There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks. The Fund’s return may not match the return of the Underlying Index. The Fund is subject to certain other risks. The Fund is non-diversified and may experience greater volatility than a more diversified investment. Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale. The Fund may engage in frequent trading of securities in connection with the rebalancing or adjusting its Underlying Index. Investments focused in a particular industry or sector, such as leisure and entertainment, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. Fund information reported as of February 14, 2017.