We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Breakwave Advisors, in partnership with ETF Managers Group (ETFMG), recently launched an ETF that seeks to invest in freight futures, focusing on dry bulk shipping. The name of the fund is Breakwave Dry Bulk Shipping ETFBDRY. Let’s delve a little deeper.
Inside BDRY
The fund looks to offer exposure to the daily change in the price of dry bulk freight futures. The fund consists of a three-month strip of the nearest calendar quarter of futures contracts on specified indexes that follow rates for shipping dry bulk freight.
Baltic Capesize Time Charter - Second Quarter 2018 takes about 46.6% of the fund followed by Baltic Exchange Panamax T/C Average Shipping Route - Second Quarter 2018 which makes up about 40.4% of the portfolio. Baltic Exchange Supramax Average Shipping Route - Second Quarter 2018 gets the third spot with about 7.4% exposure. The expense ratio of the fund is 1.72%.
How Does It Fit in a Portfolio?
As per the issuer, the investment area is less uncorrelated to other major assets. Though shipping companies also offer exposure to this segment, a focus on freight futures enables investors to rule out the broader market as well as company-specific risks.
The issuer defined the space as “relatively untouched” with “commodity-driven fundamentals.” Also, with broad commodities staging a nice comeback lately on favorable demand-supply dynamics, dry bulk freight futures area should perform well in the near term (read: Why These Commodity ETFs Are on a Tear).
John Kartsonas, Founder and Managing Partner of Breakwave Advisors LLC, indicated that “freight futures have historically exhibited strong cyclical returns.” Since the global economy is likely to witness its strongest growth in seven years in 2018, this cyclical industry (dry bulk) is poised to benefit ahead. According to Reuters, hedge funds have started investing massively in the shipping sector through stocks thanks to recovering industry fundamentals.
Per the issuer, China tops the dry bulk trade, making up about 40% of total key dry bulk goods trade and more than 70% of iron ore trade. Maximum demand growth came from China last year. Japan and South Korea constitute more than 25% of total coal trade. With all these economies gaining traction, demand for dry bulk should perk up. Notably, seaborne dry bulk trade has witnessed a CAGR of 4.6% since 2000 (read: China Had a Strong Start in 2018: ETFs to Buy).
However, talks of trade war originated lately from President Trump’s protectionist agenda. This can hurt global freight as well as shipping sector, if materializes (read: Will Trade War & Inflation Worries Spoil Dow ETF Party?).
Competition
The concept is new to the ETF industry. Investors can access the space through Guggenheim Shipping ETF (SEA - Free Report) , but the formation of the two funds are not same. The fund SEA gives the stock performance of high dividend-paying global shipping companies, mainly those that transport goods and materials.
On the other hand, the newbie BDRY holds freight futures with a weighted average of about three months to expiration. So, the road ahead for the product is smooth. It should not face steep competition.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Load Freight Futures With This New ETF
Breakwave Advisors, in partnership with ETF Managers Group (ETFMG), recently launched an ETF that seeks to invest in freight futures, focusing on dry bulk shipping. The name of the fund is Breakwave Dry Bulk Shipping ETF BDRY. Let’s delve a little deeper.
Inside BDRY
The fund looks to offer exposure to the daily change in the price of dry bulk freight futures. The fund consists of a three-month strip of the nearest calendar quarter of futures contracts on specified indexes that follow rates for shipping dry bulk freight.
Baltic Capesize Time Charter - Second Quarter 2018 takes about 46.6% of the fund followed by Baltic Exchange Panamax T/C Average Shipping Route - Second Quarter 2018 which makes up about 40.4% of the portfolio. Baltic Exchange Supramax Average Shipping Route - Second Quarter 2018 gets the third spot with about 7.4% exposure. The expense ratio of the fund is 1.72%.
How Does It Fit in a Portfolio?
As per the issuer, the investment area is less uncorrelated to other major assets. Though shipping companies also offer exposure to this segment, a focus on freight futures enables investors to rule out the broader market as well as company-specific risks.
The issuer defined the space as “relatively untouched” with “commodity-driven fundamentals.” Also, with broad commodities staging a nice comeback lately on favorable demand-supply dynamics, dry bulk freight futures area should perform well in the near term (read: Why These Commodity ETFs Are on a Tear).
John Kartsonas, Founder and Managing Partner of Breakwave Advisors LLC, indicated that “freight futures have historically exhibited strong cyclical returns.” Since the global economy is likely to witness its strongest growth in seven years in 2018, this cyclical industry (dry bulk) is poised to benefit ahead. According to Reuters, hedge funds have started investing massively in the shipping sector through stocks thanks to recovering industry fundamentals.
Per the issuer, China tops the dry bulk trade, making up about 40% of total key dry bulk goods trade and more than 70% of iron ore trade. Maximum demand growth came from China last year. Japan and South Korea constitute more than 25% of total coal trade. With all these economies gaining traction, demand for dry bulk should perk up. Notably, seaborne dry bulk trade has witnessed a CAGR of 4.6% since 2000 (read: China Had a Strong Start in 2018: ETFs to Buy).
However, talks of trade war originated lately from President Trump’s protectionist agenda. This can hurt global freight as well as shipping sector, if materializes (read: Will Trade War & Inflation Worries Spoil Dow ETF Party?).
Competition
The concept is new to the ETF industry. Investors can access the space through Guggenheim Shipping ETF (SEA - Free Report) , but the formation of the two funds are not same. The fund SEA gives the stock performance of high dividend-paying global shipping companies, mainly those that transport goods and materials.
On the other hand, the newbie BDRY holds freight futures with a weighted average of about three months to expiration. So, the road ahead for the product is smooth. It should not face steep competition.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>