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Shipping ETF Tops in 2021: What's Behind the Surge?
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Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , which is the only freight futures ETF exclusively focused on dry bulk shipping, is the top-performing ETF of this year, having gained more than 241%.
The spectacular rally has been driven by the ongoing supply chain issues around the world caused by the pandemic. This has bolstered the demand for dry bulk shipping, pushing the rates higher (read: 5 ETF Areas Up At Least 70% in 2021).
The dry bulk market includes iron ore, coal, grains, oilseeds, steel, cement, forest products, agricultural products, non-ferrous minerals and metals. The Baltic Dry Index, which tracks rates for vessels that carry dry bulk commodities, has climbed about 68% over the past year. Notably, the rates for a single shipping container have skyrocketed over the past 18 months.
As most of the major commodities are transported by ships, the outlook for the global shipping industry remains strong. Port congestion and delays are the primary drivers as the pandemic has halted the movement of ships and will continue to do so at least in the near term. In fact, China’s congestion issue has affected all ship sizes from capes to handies, leading to limited port activity and the pile-up of agricultural cargoes. China dominates the dry bulk market with about 40% of total major dry bulk goods trade.
Additionally, the uptick in iron ore shipments this year has triggered an increase in the volume of Cape arrivals in China, sustaining queues. The decline in container availability has pushed the bulk rates higher.
Per the report, the global dry bulk shipping market is projected to grow from $35 billion in 2020 to $101 billion by 2027 with a CAGR of 16%. Accelerating economic growth backed by job growth and rising wages, higher urbanization, rising steel production, and growing coal industry bode well for the dry bulk shipping market (read: all the Industrial ETFs here).
Further, the growth of the dry bulk shipping industry has been buoyed by stronger industrial development across the globe, and increased technological advances, including the monitoring of shipping materials and the allocation of an identification number to individual items.
Let’s take a closer look at the fundamentals of BDRY.
BDRY in Focus
Breakwave Dry Bulk Shipping ETF provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It is designed to reduce the effects of rolling contracts by using a laddered strategy to buy contracts while letting existing positions expire and settle in cash.
Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures, based on the prevailing calendar schedule. This approach reduces the effects of rolling contracts by using a laddered strategy to buy contracts. The freight futures allocation will be 50% Capesize contracts, 40% Panamax contracts, and 10% Supramax contracts (read: 4 ETFs Up At Least 7% Amid Last Week's Market Slump).
Breakwave Dry Bulk Shipping ETF has accumulated about $53.7 million in AUM and trades in a good volume of about 356,000 shares per day on average. It charges a higher annual fee of 3.47%.
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Shipping ETF Tops in 2021: What's Behind the Surge?
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , which is the only freight futures ETF exclusively focused on dry bulk shipping, is the top-performing ETF of this year, having gained more than 241%.
The spectacular rally has been driven by the ongoing supply chain issues around the world caused by the pandemic. This has bolstered the demand for dry bulk shipping, pushing the rates higher (read: 5 ETF Areas Up At Least 70% in 2021).
The dry bulk market includes iron ore, coal, grains, oilseeds, steel, cement, forest products, agricultural products, non-ferrous minerals and metals. The Baltic Dry Index, which tracks rates for vessels that carry dry bulk commodities, has climbed about 68% over the past year. Notably, the rates for a single shipping container have skyrocketed over the past 18 months.
As most of the major commodities are transported by ships, the outlook for the global shipping industry remains strong. Port congestion and delays are the primary drivers as the pandemic has halted the movement of ships and will continue to do so at least in the near term. In fact, China’s congestion issue has affected all ship sizes from capes to handies, leading to limited port activity and the pile-up of agricultural cargoes. China dominates the dry bulk market with about 40% of total major dry bulk goods trade.
Additionally, the uptick in iron ore shipments this year has triggered an increase in the volume of Cape arrivals in China, sustaining queues. The decline in container availability has pushed the bulk rates higher.
Per the report, the global dry bulk shipping market is projected to grow from $35 billion in 2020 to $101 billion by 2027 with a CAGR of 16%. Accelerating economic growth backed by job growth and rising wages, higher urbanization, rising steel production, and growing coal industry bode well for the dry bulk shipping market (read: all the Industrial ETFs here).
Further, the growth of the dry bulk shipping industry has been buoyed by stronger industrial development across the globe, and increased technological advances, including the monitoring of shipping materials and the allocation of an identification number to individual items.
Let’s take a closer look at the fundamentals of BDRY.
BDRY in Focus
Breakwave Dry Bulk Shipping ETF provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It is designed to reduce the effects of rolling contracts by using a laddered strategy to buy contracts while letting existing positions expire and settle in cash.
Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures, based on the prevailing calendar schedule. This approach reduces the effects of rolling contracts by using a laddered strategy to buy contracts. The freight futures allocation will be 50% Capesize contracts, 40% Panamax contracts, and 10% Supramax contracts (read: 4 ETFs Up At Least 7% Amid Last Week's Market Slump).
Breakwave Dry Bulk Shipping ETF has accumulated about $53.7 million in AUM and trades in a good volume of about 356,000 shares per day on average. It charges a higher annual fee of 3.47%.