Travel stocks are in a bull market thanks to a surge in the demand for travel, according to analysts.
But many investors don’t get their hands on these stock portfolios because they’re too costly.
Travel stock portfolios are typically much cheaper than the prices that the stocks are trading at, said Matt Tuck, senior equity strategist at Capital Advisors.
That makes them an ideal investment for a wide range of investors who want to diversify their portfolios away from the stocks that are currently being sold, Tuck said.
The stock portfolios typically include travel stocks, such as Expedia and Priceline, as well as airlines.
“The main reason people want to invest in travel stocks is because of the demand that’s been generated for them,” Tuck told The Wall St. Journal.
The U.S. economy is improving and companies are looking to diversifying their investments, said Chris Hildebrand, chief investment officer at U.K.-based brokerage CBRE.
“That’s the biggest reason that travel stocks are really hot,” he said.
Investors looking to get into the stock market right now should get their act together by reading a travel stock index fund guide, according the TravelStock Index, a project of Capital Advisers.
The index provides detailed information on the stock price and price-to-earnings ratios of the most popular travel stocks.
The travel stocks that provide the best returns are usually held by wealthy individuals who are looking for a diversified portfolio, Hildemarkt said.
Travel stocks typically start at around $50,000 and typically trade in the $25,000 range, said John K. Cappelli, a financial analyst at Capital Asset Management.
But you can get even cheaper stocks, at $30,000, he said, by holding shares in travel-related companies like Expedia or Priceline.
“They’re generally much cheaper,” he told The Associated Press.
“It’s a very small, niche market.”
The travel stock indexes aren’t the only places where investors can look to get in on the action.
Travel is also a good place to diversiate your portfolio.
Travelers often invest in hotels, which offer the cheapest, most convenient and most luxurious travel experiences.
But the real payoff comes from staying longer in a hotel.
If you’re traveling long-term, staying in one place can cost more than you’d expect, said Kristin Pankowski, chief economist at Cushman & Frierson.
“In the long term, you need to stay in a more expensive hotel,” Pankowski said.
For example, a trip to Disney World could cost more in a Disney resort than a trip home to Chicago or Washington, D.C., she said.
So if you’re looking for an option to diversify your portfolio, a hotel-focused index fund could be a great investment.
The TravelStock TravelShares TravelShares Index fund was created in 2014 by Kynan and Cappellos to provide diversified, cost-efficient options to investors interested in investing in travel, Pankowksi said.
It’s the first investment fund created by a travel-focused ETF, she added.
Travel funds have a high expense ratio and don’t provide a diversification option because they don’t allow you to hedge your exposure to a variety of stocks, she said, adding that the fund uses a mix of cash and debt to create an overall cost-effective portfolio.
The fund is also designed to offer a broad range of travel-specific companies, which is important because you don’t have a comprehensive portfolio to choose from, Packowski said.
“If you’re a traveler, you want to be diversified,” she said