NEW YORK (TheStreet) -- Let's just say upfront that the airline exchange-traded fund business doesn't seem like the world's greatest business. Guggenheim Partners acquired an airline ETF in 2010 and shut it down in 2013. Direxion Shares started one in 2010 and shut it down in 2011. Neither lured many investors -- the Guggenheim fund shut down with assets of $21 million.
On April 30, San Antonio-based US Global Investors started its Global Jets ETF (JETS). This was just in time for the May collapse of U.S. airline shares. The fund opened at $24.49 and ended the first month down 6% at $23.10. Shares closed Tuesday at $23.44.
Obviously, it's not fair to judge this effort by the first month's negative performance. Certainly, U.S. Global Investors CEO Frank Holmes sees it differently. "It's exciting for us, our first ETF, and we've blown out all the numbers when it comes to trading volume," he said in an interview. The fund has been trading about 120,000 shares a day and had assets of $37.6 million as of Tuesday's close.
Jim Cramer wrote Friday that airlines, "right now, are in free fall" and that, if he were a buyer of airlines, he "would wait for the downgrades to happen." But Holmes looks at the bright side.
Airline industry trends -- including profits, margins, ancillary revenue, cash flow and declining debt -- have all been positive for a couple of years. Also, Holmes noted that in April American (AAL) CEO Doug Parker said he would take his compensation in stock. "Other CEOS have done it because they are confident about their industries and stock," Holmes said. In May, he noted, Delta (DAL) announced a $5 billion stock buyback and a 50% dividend increase.