Claymore announced today that it has launched the first exchange-traded product for the global passenger airline industry in the form of an ETF with ticker 'FAA' , which is summarized below by the President of Claymore Securities, Christian Magoon, below:
“Passenger airlines make up the vital networks by which the world connects itself, and we are happy to be the first ETF provider to offer investors access to a portfolio of some of the most actively traded global passenger airline stocks,” . . . “FAA is an industry first and yet another example of the innovation and insight Claymore strives to deliver to the marketplace.”
The ETF will seek to replicate the NYSE Arca Global Airline Index (AXGAL), which is an index that tracks the performance of selected securities of passenger airlines from around the world. At each rebalance, the index will contain about 70% U.S. passenger airline companies, with the remaining weight allocated to international passenger airlines.
The companies included in the Index must derive at least 50% of their revenue from passenger airline operations. Additionally, constituents must have a market capitalization of at least $100M and a 100-day average daily trading volume of at least $1M. As of December 31, 2008, the top five index constituents were AMR Corp (AMR), Continental Airlines Inc (CAL), Southwest Airlines Co (LUV), JetBlue Airways Corp (JBLU) and Delta Airlines Inc (DAL).
While passenger airlines face obvious headwinds associated with the global economic slowdown, positive trends include sharply lower jet fuel costs and reduced capacity through M&A + grounded planes. Since the airline stocks offer tremendous volatility, FAA should be extremely popular with traders by providing a cost-efficient vehicle to trade the entire industry rather than taking on the added risk of investing in the individual companies.
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$7.47 (01/26/09)
