Tourism Funds present a compelling opportunity for investors looking to capitalize on the rebound and long-term growth potential of the travel industry. According to the Australian Statistics Institute (ASI), tourism’s contribution to gross domestic product (GDP) rose 60.1% to $57.1b in chain volume terms in 2022-23 but remains below the 2018-19 peak of $63.4b. Tourism’s contribution to the economy’s GDP rose to 2.5% in 2022-23 but remains below the 2018-19 level of 3.1%. In this article, we provide the top ten reasons why you should consider investing in a tourism fund.
1. Diversified Exposure to the Travel Sector
Tourism Funds like Defender Tourism Fund provide instant diversification, by directly investing in tourism assets across Australia that are managed by the fund. Not only does this increase the risk of higher returns, but it enables a stronger hedge against macroeconomic volatility such as inflation and financial crisis. If one location does not do well, the other locations may do well and outperform.
2. Potential for Strong Returns
The travel industry has historically shown resilience and the ability to bounce back from economic downturns. As the global economy remains resilient, the pent-up demand for travel is expected to drive growth in the sector. Tourism Funds can provide investors with exposure to this potential upside, especially in Australia with a worldwide reputation for being a hospitable tourist destination.
3. Reduce Exposure to Sudden Attacks
Major travel companies like Booking Holdings, Marriott, Delta Air Lines, and Carnival are often among the top holdings in tourism funds. But one-of events like cyber attacks can shave off significant amounts of value. Investing in tourism funds can enable you to gain access to direct assets in the sector, with the potential to deliver strong returns and higher value while shielding you from global attacks that can significantly impact value.
4. Convenience and Cost-Effectiveness
Investing in tourism Funds is more convenient and cost-effective than building and managing a portfolio of individual travel stocks. Having a range of assets like Defender Tourism Fund means that they can adjust their strategy and make changes that can support the stock over the long run. For example, while traditional stocks can do very little to boost their performance during a downturn, sales can encourage demand for tourism spots, thereby supporting revenues over the long run.
5. Potential for Dividend Income
Some tourism Funds pay dividends above 10%, making funds like Defender Tourism Fund very attractive. While managing and growing the portfolio is the main aim of the fund, dividend income makes it an attractive proposition for any investor. Rather than invest in stocks that may not give or pay any dividends, the Defender Tourism Fund enables investors to generate and enjoy strong returns. Furthermore, this could be influenced by seasonal trends, with peak travel seasons typically occurring during the summer months and holiday periods. Tourism Funds may have the potential to outperform during these peak seasons as demand for travel services increases.
6. Opportunity for Long-Term Growth
The travel industry is expected to continue growing in the long run, driven by factors such as rising disposable incomes, increasing globalization, and the growing middle class in emerging markets. Investing in tourism Funds allows you to participate in this long-term growth story. Remember that 44 cents of every tourism dollar were spent in regional destinations and tourism was Australia’s fourth largest exporting industry, accounting for 8.2% of Australia’s export earnings. There are now more than 1.4 billion international travelers globally, spending US$1.5 trillion per year.
7. Potential for Hedging Against Inflation
As the economy recovers and inflation rises, tourism Funds may provide a hedge against inflation. The travel industry often benefits from increased consumer spending during inflationary periods, as people prioritize experiences and travel. This could support returns for shareholders and further make the case for why tourism funds are a great investment
8. Alignment with Personal Interests
For investors who are passionate about travel and tourism, investing in tourism funds can be a way to align their investments with their interests and beliefs. This can add an extra layer of satisfaction to the investment process.
Tourism funds offer a compelling investment opportunity for those looking to gain exposure to the travel industry’s growth potential. With diversified exposure, potential for strong returns, and convenience, tourism funds are worth considering as part of a well-diversified portfolio. Defender Tourism fund’s portfolio includes properties such as Ballina Beach Resort, Tuross Beach, Stewarts Bay Lodge, and Barclay Motor Inn, and central to this idea is its belief that a well-acquired and well-run asset will deliver superior returns over the long period for investors.
