It was bound to happen … with the so-called reopening trade creating pent-up demand for travel, it was only a matter of time before an exchange-traded fund hit the scene to capitalize on the trend. And so it is with today’s launch of the Defiance Hotel, Airline, and Cruise ETF, which trades with the cheeky ticker symbol CRUZ.

True to the fund’s name, its thematic portfolio contains three subsectors within the travel and tourism industry. Airlines comprise the largest sector weight, at nearly 50%. The hotel and cruise line sectors account for 34% and roughly 16%, respectively.

The underlying BlueStar Global Hotels, Airlines, and Cruises Index is a float-adjusted market-cap-weighted grouping of companies that get at least half of their revenue from the passenger airline, hotel and resort (excluding motel chains), and cruise industries. The index was created this year, so it has no backtesting track record to speak of. In other words, this is very much a new ETF concept trying to capture a current trend.

The investment case for this ETF is pretty simple. Everyone in the world was told to stay home and to keep away from each other for roughly a year during the coronavirus pandemic, and many countries shut tight as a clam in an attempt to keep the virus at bay. But the successful rollout of vaccines (uneven as it is across the globe) has turned the tide on Covid-19, and many people are ready to have fun again. To paraphrase a former, long-running advertising campaign from CRUZ portfolio holding Southwest Airlines, we’re free to move about the country. Headlines abound with reports of robust leisure travel bookings and the return of business travel, and share prices of the stocks of many travel and tourism-related companies have jumped as a result.

That begs the question: Is this new ETF late to the party?

Obviously, Defiance doesn’t think so. The company couldn't be reached for comment, but its marketing material cites various sources showing that the travel and tourism industry contributed $8.9 trillion to global GDP before the pandemic, and that global lockdowns cost the industry an estimated $3.3 trillion. It sees a big rebound in the offing.

The new CRUZ fund isn’t the only way to play the reopening trade in travel, an area that could also include leisure and entertainment. The U.S. Global Jets ETF (JETS) became a popular trading vehicle during the pandemic and has zoomed to $4 billion in assets. Following its massive nosedive in the spring of 2020, this global airline industry-focused fund regained altitude (pardon the obvious puns) with a subsequent gain of 120%, though it has been treading water—and is actually down a little bit—since mid-March. All told, it’s up 18% this year. 

Meanwhile, the Invesco Dynamic Leisure and Entertainment ETF (PEJ) employs various investment factors (price momentum, earnings momentum, quality, management action, and value) to construct a portfolio of 30 U.S. leisure and entertainment companies. This is a broader mix of companies that includes reopening trade opportunities such as the Walt Disney Co., Expedia Group and various restaurant chains, but also includes companies that don’t fit the classic reopening mold such as ViacomCBS Inc. and Sysco Corp. This fund has gained 150% since its March 2020 lows, and is up nearly 31% year to date.

The JETS and PEJ funds charge fees of 0.60% and 0.63%, respectively. The CRUZ fund’s net expense ratio is 0.45%.

Defiance ETFs opened shop in 2018 and offers seven thematic ETFs.