These ETFs Give Excellent Exposure to the Cruise Line Industry

Cruise lines have been through the ringer, but investing in down stocks could mean heightened return upon recovery.

Rachel Curry - Author

Dec. 23 2020, Updated 5:09 a.m. ET

The pandemic has hit the market hard, but the cruise industry has taken a particularly fervent beating. Cruise line stocks have been volatile over the course of 2020, but investing in individual stocks does bring more risk than a diversified fund.

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However, investors can use ETFS that invest in cruise lines to boost capital into the industry without posing enormous risk. As Norwegian Cruise, Carnival Corporation, and Royal Caribbean continue to await their first post-pandemic voyage, baskets of stocks are working together to keep the sector afloat in the market.

Are there any cruise line ETFs?

There aren't any ETFs that are specific to cruise lines only, but there are plenty of ETFs that include major cruise companies in the mix.

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In a basket of securities like an ETF, this is a good thing for a struggling industry as well as the investors who choose to put their capital at risk. After all, ETFs are more tax-efficient and they offer increased security when it comes to returns.

Cruise lines are in the 3X ETF

The Direxion Daily S&P 500 High Beta Bull 3X Shares goes by "HIBL" on the NYSE ARCA. It's only been around since Nov. 2019, but this fund aims to outperform the S&P 500 High Beta index. More than 80 percent of the 3X ETF goes toward financial instrument assets, but the remainder is a diverse array.

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Norwegian Cruise Line Holdings Ltd. accounts for 0.24 percent of the 3X ETF. That actually puts Norwegian in fifth place as far as total net assets. They're beat only by Discover Financial Services, Tapestry Inc., Dreyfus Government Cash Management, and Financial Square Treasury Instruments (the last two have the highest holdings at 25.52 percent and 29.52 percent, respectively).

Check out this cruise line ETF from Vanguard

The main Vanguard ETF containing noteworthy cruise line securities is the Vanguard Consumer Discretionary ETF ("VCR"). VCR is basically the ETF version of VCDAX, Vanguard's discretionary index fund. The ETF has an 18.46 percent five-year return, but its expense ratio is rather low at 0.1 percent. 

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Hotels, resorts, and cruise lines account for three percent of the ETF as of Nov. 30.

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Norwegian Cruise Line ETFs are plentiful

Norwegian Cruise Line has found its way into at least 85 ETF baskets. Norwegian has the most exposure in the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (or "RCD" on the ARCA), where it holds 2.05 percent. 

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Other options include the iShares Morningstar Small Cap Value ETF (or "JKL" on the same exchange) and the Direxion Daily S&P 500 High Beta Bull 3X Shares.

There's no shortage of ETFs with Carnival Cruise Line holdings, either

Carnival Cruise Line has 110 ETF holdings. The stock's most prominent allocation can be found in the SoFi 50 ETF, or "SFYF" on the ARCA. There, it holds about 1.98 percent. 

Other ETFs include the iShares Evolved U.S. Media and Entertainment ETF ("IEME" on the BATS Exchange) and the Vanguard Small Cap Value Index Fund ETF ("VBR" on the ARCA).


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