Reopening trade still has room to function, according to several market analysts.
Many investors wonder if the windfall of the economic recovery has been incorporated into the stock market, but for AdvisorShares founder and CEO Noah Hamman, it is not yet a reality.
The reopening rally “has only just begun,” said Hamman, whose company last week launched the AdvisorShares Hotel ETF (BEDZ) and AdvisorShares Restaurant ETF (EATZ).
“You have US savers who have withheld capital,” he told UKTN’s “ETF Edge” Monday. “They’ll be willing to spend it, they’ll spend it aggressively, and they’ll do it in areas like restaurants or hotels that are really willing to absorb that demand.”
Vici Properties, Airbnb, Full House Resorts, Marriott International and Extended Stay America are the top five titles of BEDZ. Jack in the Box, Del Taco, Brinker International, Yum Brands and Darden are EATZ’s largest positions.
Rising interest rates may also help reopen largely value-driven games, said Steve Grasso, general manager of institutional sales at Stuart Frankel and contributor to UKTN.
“There is still gasoline left in the tank for the reopening parts,” Grasso said in the same “ETF Edge” interview.
Shares of hotels, restaurants and airlines in particular are expected to benefit from the strong growth in gross domestic product expected in the first quarter of 2021, he said.
“The flip side is you still have checks sent to individuals and we don’t know when those checks will end,” Grasso said. “So it’s hard to stop reopening the trade when the money keeps flowing.”
Mark Yusko, founder, CEO and CIO of Morgan Creek Capital Management, agreed that the reopening of the games has “a lot more to do” in terms of the upside.
“What has to happen is a real recovery. People have to get back to normal, and I think that hasn’t happened yet,” he said in the same ETF Edge interview. , adding that investors shouldn’t be over-excited by a pop-in. GDP.
“The real key here is the way AdvisorShares does it, it’s active management,” said Yusko. “We are convinced that we are on the cusp of a fairly significant transition over the next decade towards active management, away from liabilities, away from indexation, and that will really favor these types of ETFs.
However, investors should always keep track of fundamentals in the hotel and restaurant industries, said Tom Lydon, CEO of ETF Trends, in the same ETF Edge interview.
“Restaurants [are] struggling to hire people right now because a lot of that lower paying workforce was doing other things during the pandemic – going back to school, finding other careers – and also, the awards foodstuffs exploded, ”he said. , the profitability of restaurants and indeed of hotels is something that we also have to watch. “
Nonetheless, “I am optimistic about the space,” Lydon said.
BEDZ and EATZ both climbed around 1% in early trading on Tuesday.