10-Q: Amplify Commodity Trust Reports Soaring Q1 2026 Gains

Amplify Commodity Trust's BDRY and BWET ETFs delivered exceptional performance in Q1 2026, driven by robust dry bulk and tanker freight markets amid geopolitical shifts.

Summary

• Amplify Commodity Trust reported a combined net income of $30,404,930 for the three months ended March 31, 2026, a significant increase from $5,892,299 in the prior year period.
• For the nine months ended March 31, 2026, combined net income was $59,158,750, a substantial turnaround from a net loss of $(10,922,361) in the same period last year.
• The Breakwave Dry Bulk Shipping ETF (BDRY) saw its net asset value (NAV) per share increase by 15.39% for the three months and 79.35% for the nine months ended March 31, 2026.
• BDRY's market value per share increased by 13.69% for the three months and 79.64% for the nine months ended March 31, 2026.
• The Breakwave Tanker Shipping ETF (BWET) experienced an extraordinary NAV per share increase of 521.21% for the three months and 1,026.28% for the nine months ended March 31, 2026.
• BWET's market value per share surged by 411.31% for the three months and 825.31% for the nine months ended March 31, 2026.
• Dry bulk spot rates were up over 70% year-over-year, despite a slight sequential dip, driven by strong iron ore and bauxite demand.
• Crude tanker spot rates, particularly for Very Large Crude Carriers (VLCC), more than doubled sequentially due to geopolitical turmoil in the Middle East and disruptions in the Strait of Hormuz.
• Both funds maintain an expense cap of 3.50% (excluding brokerage commissions, interest expense, and extraordinary expenses) through December 31, 2026, with the Sponsor and CTA waiving/assuming expenses to meet this limit.
• BWET has potential future repayments of $803,901 to Breakwave for waived CTA fees, expiring between June 30, 2026, and June 30, 2028.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a highly positive report, driven by exceptional performance in the tanker shipping ETF (BWET) due to geopolitical events and strong dry bulk market conditions. While significant risks are acknowledged, the overall financial turnaround and high returns warrant a strong sentiment.

Positives

• Combined net income for the three months ended March 31, 2026, was $30,404,930, a significant improvement from $5,892,299 in the prior year.
• Combined net income for the nine months ended March 31, 2026, was $59,158,750, reversing a net loss of $(10,922,361) from the previous year.
• BDRY's NAV per share total return was 15.39% for the three months and 79.35% for the nine months ended March 31, 2026.
• BWET's NAV per share total return was an exceptional 521.21% for the three months and 1,026.28% for the nine months ended March 31, 2026.
• Dry bulk spot rates averaged more than 70% higher year-over-year, indicating a strong market despite seasonal weakness.
• Crude tanker spot rates, especially for VLCCs, more than doubled sequentially, reaching multi-year highs due to geopolitical events.
• The dry bulk orderbook is increasing from relatively low levels, currently at approximately 13% of the global fleet, suggesting future demand for new vessels.

Negatives

• BDRY's net income for the three months ended March 31, 2026, was $4,545,434, a decrease from $5,782,492 in the same period of 2025.
• BWET's market value per share ($98.50) was significantly lower than its NAV per share ($119.74) as of March 31, 2026, indicating a substantial discount.
• BWET is subject to potential future repayments of $803,901 to Breakwave for previously waived CTA fees, with expirations through June 30, 2028.
• The Chinese economy continues to grow at relatively weak rates, and the domestic real estate market remains subdued, posing a headwind for iron ore demand.
• Record high portside iron ore inventories remain a headwind for significant growth in iron ore trade.

Risks

• Geopolitical conflicts in the Middle East (Israel, U.S., Iran) have materially disrupted oil flows, significantly impeding transits through the Strait of Hormuz, leading to sharp increases in tanker freight rates but also a high risk of significant correction.
• Broader economic effects from the Middle East conflict could weaken global demand for commodities, potentially pressuring dry bulk freight rates.
• The Russia-Ukraine war poses increasing risks for global economic growth, affecting oil and natural gas prices, and causing a reshuffling of tanker trade patterns and increased volatility in tanker freight rates.
• The combined Russia and Ukraine region accounts for approximately one-quarter of global grain production, and reduced exports could negatively impact demand for dry bulk transportation.
• Negative Roll Risk: The funds may incur losses when rolling futures contracts if the expiring contract value is lower than the next prompt contract value (contango curves).
• Liquidity Risk: Disruptions in markets for futures contracts or financial instruments could prevent the funds from quickly disposing of holdings at desired prices, potentially increasing losses.
• Natural Disaster/Epidemic Risk: Events like earthquakes, floods, or widespread diseases (e.g., COVID-19) can disrupt economies and markets, leading to increased volatility and significant market losses, potentially affecting the funds' performance.
• China's economic slowdown and policies could materially adversely affect tanker charter rates and freight futures.
• Tariffs on import goods by the U.S. and other countries could negatively impact trade volumes, leading to decreased demand for transportation and lower shipping rates for both dry bulk and tanker sectors.
• Regulatory changes in the U.S. and internationally (e.g., Dodd-Frank Act, MiFID II, EMIR) could alter the nature of investment in the funds, increase costs, or impact liquidity in commodity markets.

Future Outlook

The trajectory of the current Middle East conflict is expected to be the primary determinant of tanker rates, with a high risk of significant correction. China's slower oil import growth and weaker domestic demand pose material downside risks to tanker rates. The dry bulk orderbook continues to increase, but record high portside iron ore inventories remain a headwind for significant trade growth. Uncertainty around trade policies and geopolitics keeps the risk of adverse impact on shipping elevated.

Management Comments

• Dry bulk spot rates remained relatively flat during the three months ended March 31, 2026, averaging about 3% lower versus the previous period, but averaged more than 70% higher on a year-over-year basis, leading to one of the best first quarter periods in history.
• Strong demand for iron ore transportation combined with solid bauxite volumes out of West Africa continue to be the main reasons for the strong dry bulk performance.
• Crude tanker spot rates increased considerably during the three months ended March 31, 2026, with average spot rates for Very Large Crude Carriers (VLCC) more than doubling sequentially.
• Geopolitical turmoil, specifically the U.S. and Iran conflict and the closure of the Strait of Hormuz, is the primary reason for the significant outperformance in tanker rates.
• Given the heightened uncertainty in the Middle East, the risk of a significant correction in spot tanker rates is very high.

Industry Context

StockSavvy.ai notes that both BDRY and BWET operate in unique niches as the only freight futures ETFs globally, making direct peer comparison challenging. The dry bulk market demonstrated strong year-over-year growth despite recent flatness, indicating underlying resilience. The tanker market experienced an exceptional surge driven by acute geopolitical events, highlighting the sector's extreme sensitivity to global affairs and supply chain disruptions. The increasing dry bulk orderbook suggests a longer-term positive sentiment in that segment, while the tanker market faces immediate volatility from ongoing conflicts and China's demand dynamics.

Comparison to Industry Standards

• BDRY and BWET are stated as the only Freight futures ETFs globally, making direct comparison to specific comparable companies or projects difficult. Their performance is benchmarked against their respective freight futures portfolios.
• The significant returns for BWET (521.21% NAV return in Q1 2026) are exceptional and likely outperform most broad market or commodity indices, reflecting the highly specific and volatile nature of crude oil tanker freight futures during periods of geopolitical tension.
• BDRY's strong returns (15.39% NAV return in Q1 2026) also indicate robust performance within its specialized dry bulk freight futures market, likely exceeding general equity market returns for the period.

Management Changes

Corporate Governance

Legal Proceedings

• The Funds are currently not a party to any pending legal proceedings.

Related Party Transactions

• Each Fund pays the Sponsor a management fee (Sponsor Fee).
• Each Fund pays Breakwave Advisors, LLC (CTA) a license and service fee (CTA Fee).
• Breakwave has agreed to waive its CTA fee, and the Sponsor has voluntarily agreed to assume remaining expenses to ensure Fund expenses do not exceed an annual rate of 3.50% (excluding brokerage commissions, interest expense, and extraordinary expenses) through December 31, 2026.
• BWET is subject to potential future repayments of $803,901 to Breakwave for waived CTA fees, expiring during the years ending June 30, 2026, 2027, and 2028.
• The Sponsor absorbed $(2,513) and reimbursed $84,434 of BDRY's expenses for the three and nine months ended March 31, 2026, respectively.
• The Sponsor absorbed $47,632 and $205,749 of BWET's expenses for the three and nine months ended March 31, 2026, respectively.

Stakeholder Impact

• Shareholders of BDRY and BWET have experienced significant positive returns, particularly BWET shareholders, benefiting from the funds' investment strategies in freight futures.
• Authorized Participants are responsible for creating and redeeming Creation Baskets, facilitating liquidity in the secondary market.
• The Sponsor (Amplify Investments LLC) and Commodity Trading Advisor (Breakwave Advisors, LLC) benefit from management and CTA fees, while also bearing the responsibility of expense caps and potential repayments.
• The contractual expense caps benefit shareholders by limiting routine operational costs, although BWET faces potential future repayments for waived CTA fees.

Next Steps

• The BDRY and BWET Benchmark Portfolios will be rebalanced annually.
• The Sponsor and CTA will continue to waive/assume expenses to ensure the funds' expense ratios do not exceed 3.50% through December 31, 2026.
• Management will continue to monitor the impact of geopolitical events, global economic growth, and trade policies on shipping markets.

Key Dates

Recommendation

The Amplify Commodity Trust's ETFs, BDRY and BWET, have demonstrated exceptional performance, particularly BWET with over 1000% NAV return for the nine-month period, driven by a unique market position and favorable, albeit volatile, industry conditions. While geopolitical risks are pronounced, the funds' ability to capitalize on these dynamics, coupled with contractual expense caps, presents a compelling opportunity for investors seeking high-growth exposure to the shipping freight futures market. The significant turnaround in combined net income further underscores the strong operational and investment management.

Keywords

Freight futures, Tanker shipping, Dry bulk shipping, ETF, Commodity pool, BDRY, BWET, Amplify Commodity Trust, SEC filing, Q1 2026, Financial results, Geopolitical risk, Market volatility, Shipping rates