Opinions and Advice, Which to Choose?

It is worth investing in ETFs on the travel and tourism sector? Which are the best? Tourism is the set of activities and services related to travel or stays made for recreational or educational purposes.

People travel for various reasons: for leisure, for education, for business, for religious reasons, to visit relatives or friends and of course for a holiday.

In origine i trips they were very different from how they are understood nowadays: in the 18th century it was mostly about travel and pilgrimages in cities with religious interests, then with the industrial revolution there was talk of great journeys intended as the movement of people from the countryside to the cities to find a secure job, and from here the phenomenon of commuting and the diffusion of further services for travelers with a consequent need to create public services and transport for people who had to move from the countryside to the city.

Investing in the travel and tourism sector today it represents a real opportunity, because tourism is now a big one economic sector.

Two words about tourism

We were just saying that tourism is an economic sector in evident expansion, and in fact we are talking about tourism sector.

They are part of tourism sector many sectors and many professional figures: we are talking about transport services (planes, trains, cars, ships), accommodation services (hotels, B&Bs, tourist villages), holiday homes that anyone can rent, restaurant services, museums and exhibitions to visit; among the professional figures we can include tour guides or museum guides and tour operators who organize trips.

This list gives a dimension and an idea of ​​the greatness of this sector.

Today, in fact, tourism is one source of revenue very substantial for many countries of the world, and for some countries it is even one of the most important and most profitable activities.

If we think of Italy, data in hand, the tourism sector accounts for about 13% of our nation’s gross domestic product (source: 2019, before the pandemic) and employs around 4 million people.

The technology also in this case it has favored the diffusion of the phenomenon, above all if we think of two categories of tourism like that last-minute e low cost. The fact of having the tools available to book quickly, to quickly consult prices and reviews of a structure, and above all also the possibility of finding good offers and the possibility of traveling at low prices has further stimulated the growth of tourism, also for those categories that perhaps do not have substantial capital such as young people for example.

The COVID-19 pandemic has certainly brought many sectors to their knees, and perhaps the one that has been most affected by it has been precisely that of tourism, above all due to the restrictions on travel.

However, the summer of 2022 practically marked the return to normality, and it is important to underline the fact that the tourism sector has returned to its former levels, even if it has not yet reached the pre-pandemic levels of 2019.

According to data from The printlhe presences in the summer quarter (June-July-August) amounted to +15.5% on 2021. As regards the national component, the increase was +5.1%, while for the foreign component it was more net, equal to +35.4%.

So let’s talk about a sector we need to think about and which after the pandemic could offer interesting returns; if you choose to invest in Tourism ETFs you will come across companies that cater to the travel and leisure industry.

But now we see the ETF on the tourism sector.

The best ETFs on Borsa Italiana

Now let’s see in detail which ETFs you can invest in.

Lyxor STOXX Europe 600 Travel & Leisure UCITS ETF

This ETF has as its reference benchmark the STOXX® Europe 600 Travel & Leisure index which tracks the European tourism and leisure sector.

The size of the fund is medium, equal to 103 million euros and it was listed in August 2006, therefore it is quite mature as a fund.

The fund is domiciled in Luxembourg and has no currency hedging.

The replication is synthetic and the dividends are reinvested in the fund with a accumulation policy.

One-year volatility is relatively high (27.86%), while i annual management costs they are 0.30%, therefore very low.

Il risk profile of this fund is equal to 5, on a scale ranging from 1 to 7, therefore we are on a medium/high risk fund.

L’sector allocation it is made up as follows: 82% of consumer discretionary goods and 18% of the industrial sector.

L’geographical allocation instead sees Ireland in first place, followed by the United Kingdom, Sweden and France. Some of the companies in the top 10 are Evolution AB, Accors and Ryanair.

iShares STOXX Europe 600 Travel & Leisure UCITS ETF

This ETF has as its reference benchmark the STOXX® Europe 600 Travel & Leisure index which tracks the European tourism and leisure sector.

The size of the fund is medium, equal to 174 million euros and it was listed in July 2002, therefore we are dealing with a mature fund.

The fund is domiciled in Germany and has no currency hedging.

Replication is physical and dividend policy is one distribution policy, with dividends being distributed at least annually to investors.

One-year volatility is relatively high (27.85%), while i annual management costs they are 0.46%.

Il risk profile of this fund stands at 5, on a scale from 1 to 7, i.e. a medium/high risk.

L’geographical allocation instead sees Ireland in first place, followed by the United Kingdom, Sweden and France.

Should you invest in ETFs in the tourism sector?

Now the question is more than legitimate, so we wonder if it is convenient to invest in this sector.

We have seen how it is a sector with excellent potentiala sector that has practically become an economic sector that has its own weighting weight within the GDP of many countries.

However, since it is still a sector that we can include in the category of luxury goods we must not forget that they perform well in good times, but they are also the first to be cut during times of crisis.

If we look specifically at the performance of the ETF examined, we can see that it is a very fund cyclic; in fact we see that it went through a very difficult period between 2007 and 2012 (the years of the crises of the world economies), with a good trend in the following years (very good in 2019) and then went through another major crisis starting from March 2020 (as we said before due to the pandemic).

Speaking of current affairs, which is what interests you, the sector has suffered a lot starting precisely from March 2020 when the restrictions on travel.

For this reason it was one different crisis from that of the years 2007-2012, for example, since at that time the crisis in the tourism sector was a consequence of the crisis in the world economy, while in this case it was also the tourism crisis that contributed to the crisis in economy.

Since the borders have been reopened and travel is no longer prohibited (since the end of April 2021) things have improved.

Furthermore, as I mentioned before, the summer of 2022 was perhaps the one that contributed most to the recovery of tourism, both in Italy and abroad.

The recovery of the sector has therefore begun, and in 2023 the trend is remaining positive: furthermore, with the approach of summer, it cannot but be otherwise.

In the long term in fact, the sector will be able to return to the glories of the past.

In conclusion, investing in sector ETFs on Borsa Italiana could be a good idea for those with large enough capital, and also for those who do not expect high returns in the very short term. The best solution is diversification, so perhaps add an investment in this fund to try to intercept the recovery of the sector, always having safer and more performing sectors available in the portfolio.

Additional Resources

If you don’t know where to start investing, then here are some free resources to consult:

Good continuation!