Like many here, I have most of my investments in a broad all-world ETF (VWRL or VT), but I let myself put a certain percent of my wealth into sector-focused ETFs that I feel have good long-term potential (I hold RBOT and a healthcare ETF, for example). While we are definitely not at the trough of this crisis (neither in public health terms nor economic terms), I want to spark some brainstorming discussion here…
1) Which sectors or regions will have the greatest rebound potential once corona-related travel/commerce/etc. restrictions are lifted? 2) Which instruments (ETFs, preferably UCITS) are available to invest in them? 3) What is the time-horizon for a return to “business-as-usual”?
I’ll go first with an obvious one:
The travel industry.
In Europe, the only ETF I’ve found is EXV9 which is not very diversified (17 holdings, Air France-KLM makes up 1.5% and Compass Group is 25%, wtf?).
My uneducated guess is business-as-usual in 1-3 years after virus containment.
Quick answer: The ones that are hit hardest. The travel industry, for instance. Hotels, and more so airlines. The problem is (and I’ve quoted the CEO of Swiss) a couple of days ago on this forum, airlines are all practically broke without government support. These stocks might drop down close to zero for the mere fear of liquidity issues they’ll be facing. It’s basically a lottery investing in them.
It sounds boring and quoting the obvious but I am rather focusing to buy solid companies at a reasonable price - and among them maybe find a few that might benefit longterm from this crisis.
I think the travel industry will have more issues coming in the medium/long term because of the climate crisis which looms next. We can’t keep flying like that all over the globe just to go sit on a beach in winter. Unless we find new ways of flying without emitting greenhouse gases, that is.
Energy industry. People are using less fuel/energy - which is a good thing! There is also OPEC in-fighting dragging down petroleum prices.
some UCITS ETFs: IUES (for oil industry). INRG (for renewables).
Hard to say, but could be fairly rapid. For oil, it will depend a lot on how many small players go bankrupt and how much OPEC agrees to cut. For renewables, it will depend partly on how much gov’t stimulus packages have a “green infrastructure” tilt (in the US, it will be 0%, at least until next year).
Fuck I wish I had actually pulled the trigger on this… currently at USD12.26.
There is still a good thesis for it with an increasingly renewables-focused Europe and Asia (even Boris Johnson saying the UK will become “the world leader in clean wind energy”), and a at-the-minimum-greener-than-Trump Biden presidency. But this is, I assume, priced in. And there is a psychological barrier to buying something that has already gained so much so recently.
Yes. Still a lot of uninteresting companies in INRG. I’d take TAN + one of the leaders for wind (Vestas Wind System, Orsted, Siemens Gamesa) if you want to jump that train. May be a little late though.
BTW, post-Covid is already an exhausted topic. Now it is post-Trump.
A few things have doubled since “that week in March”
Clean energy has gone nowhere in the last 10 years. I’ve a feeling the products are a commodity in a strongly regulated market & companies have little pricing power? But such industry changes take a while to get rolling & now might be the point it gains momentum?