Yesterday saw the launch in New York of the first freight futures exchange-traded fund focusing exclusively on dry bulk shipping.
The Breakwave Dry Bulk Shipping ETF has been created by Breakwave Advisors and ETF Managers Group (ETFMG).
The fund, called BDRY for short, provides long exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. This offers investors exposure to dry bulk freight without the need for a futures trading account. BDRY 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.
“We are thrilled to bring such an innovative product to the market, allowing investors to participate directly in the exciting world of dry bulk shipping” said John Kartsonas, founder and managing partner of Breakwave Advisors. “Freight futures have historically exhibited strong cyclical returns, but for most investors it has been a very hard-to-access market. For the first time, through BDRY, a wide range of market participants can now directly access the dry bulk market using a simple, transparent, equity-like investment product.”
The fund will hold 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. The fund intends to progressively increase its position to the next calendar quarter three-month strip while existing positions are maintained and settle in cash. The initial freight futures allocation will be 50% capesize contracts, 40% panamax contracts and 10% supramax contracts, rebalancing annually.
