10-Q: Amplify Commodity Trust ETFs See Strong Q4 2025 Gains

Amplify Commodity Trust's BDRY and BWET ETFs reported significant net income and positive total returns for the quarter and six months ended December 31, 2025, driven by strong freight futures performance.

Summary

• Amplify Commodity Trust, through its Breakwave Dry Bulk Shipping ETF (BDRY) and Breakwave Tanker Shipping ETF (BWET), reported substantial improvements in financial performance for the three and six months ended December 31, 2025, compared to the same periods in 2024.
• BDRY recorded a net income of $5,550,204 for the three months ended December 31, 2025, a significant turnaround from a net loss of $(11,489,313) in the prior year period.
• BWET also saw a positive shift, reporting a net income of $752,010 for the three months ended December 31, 2025, compared to a net loss of $(770,451) in the previous year.
• For the six months ended December 31, 2025, BDRY's net income was $27,486,786, a substantial increase from a net loss of $(15,708,546) in the prior year, while BWET's net income was $1,267,034, up from a net loss of $(1,106,114).
• BDRY's Net Asset Value (NAV) per share increased by 14.81% for the three months and 55.42% for the six months ended December 31, 2025.
• BWET's NAV per share surged by 31.63% for the three months and 81.25% for the six months ended December 31, 2025.
• Dry bulk spot rates remained relatively flat in Q4 2025, with the Baltic Dry Index averaging about 9% higher, supported by strong iron ore and bauxite demand.
• Crude tanker spot rates increased significantly in Q4 2025, with Very Large Crude Carrier (VLCC) rates improving by approximately 60%, reaching five-year highs due to geopolitical turmoil and reshaped shipping routes.
• Both funds maintain expense caps, with the Sponsor and CTA waiving fees and absorbing expenses to keep the annual rate at 3.50% (excluding brokerage commissions, interest, and extraordinary expenses) through December 31, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, reflecting a significant turnaround in financial performance for both BDRY and BWET, driven by favorable market conditions in dry bulk and tanker shipping freight futures, despite some underlying economic and geopolitical uncertainties.

Positives

• BDRY achieved a net income of $5,550,204 for the three months ended December 31, 2025, a significant improvement from a net loss of $(11,489,313) in the same period last year.
• BWET reported a net income of $752,010 for the three months ended December 31, 2025, reversing a net loss of $(770,451) from the prior year.
• BDRY's total return at NAV was 14.81% for the three months and 55.42% for the six months ended December 31, 2025, indicating strong investment performance.
• BWET's total return at NAV was 31.63% for the three months and 81.25% for the six months ended December 31, 2025, demonstrating robust gains.
• Dry bulk spot rates were up approximately 9% in Q4 2025, driven by strong demand for iron ore and bauxite, and new export volumes from the Simandou mine project.
• Crude tanker spot rates for VLCCs increased by about 60% during Q4 2025, reaching the highest levels in at least five years, largely due to geopolitical factors reshaping trade routes.
• The dry bulk orderbook is increasing, currently standing at approximately 12% of the global fleet, suggesting future demand for vessels.
• The crude tanker orderbook is closer to historical averages with few new vessel deliveries expected in the next year, which could support rates.
• Both funds' expense ratios (after waiver/assumption) decreased or remained stable, with BDRY's dropping from 5.24% to 4.31% (three months) and BWET's slightly increasing from 5.18% to 5.20% (three months).

Negatives

• BDRY's net investment loss increased to $(122,278) for the three months ended December 31, 2025, from $(98,876) in the prior year.
• BWET's net investment loss increased to $(12,604) for the three months ended December 31, 2025, from $(7,172) in the prior year.
• BWET experienced a net unrealized loss on futures contracts of $(535,874) for the three months ended December 31, 2025, worsening from a loss of $(34,492) in the prior year.
• The Chinese economy continues to grow at relatively weak rates, and the domestic real estate market remains subdued, posing a headwind for dry bulk demand.
• Coal volumes have declined, and coal prices remained weak compared to the recent past.
• High portside iron ore inventories remain a headwind for significant growth in iron ore trade.
• Slower oil import growth and weaker domestic demand in China pose material downside risks to tanker rates, with current increases reflecting inventory builds rather than real demand.
• BWET's expense ratio before waiver/assumption for the six months ended December 31, 2025, increased to 23.25% from 19.23% in the prior year, indicating higher underlying costs.

Risks

• Investment Related Risk: The NAV of each Fund's shares directly relates to the value of its respective freight futures portfolio, cash, and cash equivalents, which are subject to significant fluctuations.
• Negative Roll Risk: Futures and options contracts have expiration dates, and rolling contracts forward may incur losses if the expiring contract value is lower than the next prompt contract value (contango).
• Geopolitical Risk (Russia-Ukraine War): The conflict poses risks to global economic growth, oil and gas prices, grain and coal production, and dry bulk demand, potentially leading to lower freight rates.
• Geopolitical Risk (Hamas-Israel Conflict): Escalation or expansion of hostilities in the Middle East could lead to oil supply instability, disruption of shipping routes (e.g., Straits of Hormuz), and negative impacts on freight rates.
• Geopolitical Risk (US-Venezuela Conflict): Disruptions in oil flows and vessel seizures are reshaping shipping routes and restricting available tonnage, leading to volatility in tanker rates; resolution could increase vessel supply and lower rates.
• Trade Policy Risk (Tariffs): Recent announcements of tariffs on import goods by the US and retaliatory tariffs by other countries could negatively impact trade volumes and, consequently, shipping rates for both dry bulk and tanker freight.
• China Economic Risk: Changes in China's economic and political environment and government policies may materially adversely affect tanker charter rates and freight futures.
• Liquidity Risk: Disruptions in orderly markets for futures contracts or financial instruments could prevent the Funds from quickly disposing of holdings at desired prices, especially for large positions, potentially increasing losses.
• Daily Limits: Commodity exchanges may limit price fluctuations, preventing liquidation of futures positions if prices hit daily limits for several consecutive days.
• Natural Disaster/Epidemic Risk: Events like earthquakes, floods, hurricanes, and widespread diseases (e.g., COVID-19) can disrupt economies, markets, and supply chains, adversely affecting fund performance.
• Regulatory Risk: The evolving regulatory environment for futures markets (CFTC, Dodd-Frank Act, MiFID II, EMIR) could lead to future changes altering investment nature, increasing costs, or impacting the Funds' ability to implement strategies.
• Expense Cap Expiration Risk: The contractual agreement for the Sponsor and CTA to assume/waive expenses expires on December 31, 2026; if not renewed, BDRY and BWET could be adversely impacted by higher expenses.

Future Outlook

The outlook for dry bulk shipping is uncertain for the seasonally weak first quarter, with high portside iron ore inventories and elevated trade tensions posing headwinds. For crude tanker shipping, OPEC+ supply increases are expected to support VLCC rates, and substantial crude stockpiling in China could be a positive factor, despite underlying weak Chinese demand. However, geopolitical events and potential increases in fleet supply further out remain key uncertainties for both sectors.

Management Comments

• "The Chinese economy continues to grow at relatively weak rates versus recent years while the domestic real estate market remains subdued due to limited demand for new construction and thus demand for steel products."
• "A lot of uncertainty remains around trade policies, geopolitics and the effect on trade, and thus the risk of adverse impact on shipping remains elevated."
• "Geopolitical turmoil continues to have a material impact on global shipping."
• "China remains the principal source of demand growth for crude oil, and consequently for crude tanker demand. Nonetheless, slower oil import growth and weaker domestic demand in China pose material downside risks to tanker rates."

Industry Context

StockSavvy.ai notes that the dry bulk and tanker shipping sectors, as represented by BDRY and BWET, are heavily influenced by global trade dynamics and geopolitical events. While dry bulk experienced strong demand for specific commodities like iron ore and bauxite in Q4 2025, the broader Chinese economic slowdown and trade tensions present ongoing challenges. The tanker sector, particularly VLCCs, benefited significantly from geopolitical disruptions reshaping trade routes, leading to substantial rate increases. Both ETFs operate in niche markets, with the filing explicitly stating they are the only Freight futures ETFs globally, limiting direct peer comparison but highlighting their unique exposure to these volatile commodity freight markets.

Comparison to Industry Standards

• The filing explicitly states that BDRY is the only Freight futures ETF globally, making direct comparisons to other ETFs or industry benchmarks challenging.
• The filing explicitly states that BWET is the only Freight futures ETF globally, making direct comparisons to other ETFs or industry benchmarks challenging.
• The performance of BDRY and BWET is benchmarked against their respective internal 'Benchmark Portfolios' of freight futures contracts, rather than external industry-wide shipping indices or competitor funds.
• The funds' performance is primarily driven by the daily changes in the price of dry bulk and crude oil tanker freight futures, which are influenced by global supply and demand for shipping capacity, commodity trade volumes, and geopolitical events.

Corporate Governance

Legal Proceedings

• The Funds are currently not a party to any pending legal proceedings, although they may be involved in litigation arising out of operations in the normal course of business.

Related Party Transactions

• Each Fund pays the Sponsor a management fee (Sponsor Fee) and Breakwave Advisors, LLC (CTA) a license and service fee (CTA Fee).
• Breakwave has agreed to waive its CTA fee, and the Sponsor has agreed to assume remaining expenses to cap total Fund expenses at 3.50% (excluding brokerage commissions, interest, and extraordinary expenses) through December 31, 2026.
• BDRY is subject to potential future repayments of $7,248 to Breakwave for waived fees, expiring during the year ending June 30, 2029.
• BWET is subject to potential future repayments of $1,011,137 to Breakwave for waived fees, expiring during the years ending June 30, 2026, 2027, 2028, and 2029.

Stakeholder Impact

• Shareholders: Experienced significant positive returns on their investments in BDRY (14.81% and 55.42% NAV total return for 3 and 6 months, respectively) and BWET (31.63% and 81.25% NAV total return for 3 and 6 months, respectively) for the period ended December 31, 2025.
• Shareholders: Face risks from market volatility, geopolitical events, and potential negative roll yield in futures contracts.
• Sponsor (Amplify Investments LLC): Benefits from management fees but also incurs costs by absorbing expenses above the expense cap, demonstrating commitment to fund performance.
• Commodity Trading Advisor (Breakwave Advisors, LLC): Earns CTA fees but waives portions to meet expense caps, with potential for future recoupment.
• Authorized Participants: Continue to facilitate creation and redemption of shares, paying a $300 transaction fee per order.

Next Steps

• The Sponsor and CTA will continue to manage the funds' portfolios, adjusting positions in freight futures to track their respective benchmark portfolios.
• The expense cap agreement, where the Sponsor and CTA waive fees and absorb expenses, is set to expire on December 31, 2026, which will require future evaluation.
• Breakwave has potential future repayments for waived CTA fees, with amounts expiring through June 30, 2029.

Key Dates

Recommendation

The significant turnaround from substantial losses to strong net income and impressive positive total returns for both BDRY and BWET in the latest reporting period indicates a robust recovery and favorable market conditions for freight futures. While geopolitical and economic uncertainties persist, the current performance, especially the surge in crude tanker rates and solid dry bulk demand, suggests strong momentum. The expense caps in place also provide some stability. For investors seeking exposure to commodity freight markets, these ETFs demonstrate compelling performance, warranting a strong buy recommendation.

Keywords

Freight Futures, Dry Bulk Shipping, Tanker Shipping, BDRY, BWET, Commodity ETF, SEC Filing, Quarterly Report, Financial Performance, Shipping Rates, Geopolitics, Market Risk, Liquidity Risk, Expense Ratio