10-K: Amplify Commodity Trust Reports Strong Performance

Amplify Commodity Trust's annual report for the fiscal year ended June 30, 2026, details robust performance in its Breakwave Dry Bulk Shipping ETF (BDRY) and a significant, albeit volatile, surge in its Breakwave Tanker Shipping ETF (BWET) driven by geopolitical factors.

Summary

• The Amplify Commodity Trust, comprising the Breakwave Dry Bulk Shipping ETF (BDRY) and Breakwave Tanker Shipping ETF (BWET), filed its annual report for the fiscal year ended June 30, 2026.
• BDRY experienced a strong year, with its share price increasing by 113.87% and its Net Asset Value (NAV) by 115.48%. The Baltic Dry Index averaged approximately 2,200 points, its strongest performance in three years, driven by demand growth and supply disruptions.
• BWET saw a dramatic increase in its share price (+1,293.88%) and NAV (+1,320.79%) due to extreme volatility in crude tanker spot rates, primarily caused by the U.S.-Iran conflict and its impact on the Strait of Hormuz.
• The filing details the investment objectives and strategies for both BDRY (tracking dry bulk freight futures) and BWET (tracking crude oil tanker freight futures).
• Various fees, including management fees, CTA fees, and operational expenses, are outlined, with expense caps in place through December 31, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting strong performance in the dry bulk sector and a significant rebound in the tanker sector due to geopolitical events, though future volatility is anticipated.

Positives

• BDRY's share price increased by 113.87% and NAV by 115.48% for the year ended June 30, 2026.
• BWET's share price increased by 1,293.88% and NAV by 1,320.79% for the year ended June 30, 2026.
• The Baltic Dry Index averaged approximately 2,200 points for the year ended June 30, 2026, indicating a strong dry bulk market.
• Geopolitical events significantly boosted tanker rates, leading to exceptional performance for BWET.
• The Funds have expense caps in place through December 31, 2026, limiting overall expenses to 3.50% (excluding brokerage commissions, interest, and extraordinary expenses).

Negatives

• BWET's performance is highly contingent on geopolitical developments, with a high probability of a sharp correction once regional hostilities cease and normal transits resume.
• The filing notes a pronounced softening of Chinese oil demand as a critical downside risk to the medium-term tanker outlook.
• Tariffs on import goods and corresponding increases by other countries could negatively impact trade volumes and shipping rates for both BDRY and BWET.
• The Russia-Ukraine war continues to pose risks to global economic growth, potentially impacting oil and gas prices and demand for transportation.
• The Funds' NAV is directly tied to volatile freight futures, meaning substantial losses are possible.

Risks

• The ongoing U.S.-Iran conflict has caused extreme volatility in tanker freight rates and futures, with a high probability of sharp declines upon resolution.
• The Russia-Ukraine war's impact on global economic growth, energy prices, and oil supply could negatively affect tanker freight rates and BWET's value.
• Global trade tariffs could lead to decreased trade volumes, lower shipping demand, and consequently, lower freight rates for both BDRY and BWET.
• China's economic environment and government policies could materially affect tanker charter rates and freight futures.
• Liquidity risk exists if the Funds cannot dispose of holdings quickly or at desired prices due to market disruptions or low trading volumes.
• Natural disasters and widespread disease outbreaks (like pandemics) can disrupt economies, markets, and supply chains, potentially impacting the Funds' performance.
• Negative roll risk exists where losses can be incurred when rolling futures contracts forward due to price relationships between contracts.
• The convergence of accelerating newbuild deliveries beyond projected demand growth could cap further rate appreciation in the dry bulk market.

Future Outlook

The near-term outlook for tanker freight rates remains highly contingent on geopolitical developments in the Middle East. Traditional fundamental metrics suggest a softer freight environment, and a sharp correction in rates is probable once regional hostilities cease. For dry bulk, while the market has been strong, upcoming newbuild deliveries are gradually accelerating fleet growth beyond projected demand, which needs monitoring as it could cap further rate appreciation.

Management Comments

• The Sponsor has a fundamental role in overseeing the Funds cybersecurity risk management.
• The Sponsors Chief Compliance Officer is responsible for overseeing the development, implementation, and ongoing management of the Funds Cybersecurity Policies and Procedures.
• The Funds do not anticipate making use of borrowings or other lines of credit to meet their obligations.
• The Sponsor has discretionary authority over all distributions made by the Funds and currently does not intend to cause a Fund to make any distributions.

Industry Context

StockSavvy.ai notes that the filing highlights the significant impact of geopolitical events on the shipping industry, particularly for tankers, leading to extreme rate volatility. It also underscores the ongoing influence of global trade dynamics, such as tariffs and commodity demand in key regions like China, on both dry bulk and tanker markets.

Comparison to Industry Standards

• The Baltic Dry Index averaged approximately 2,200 points for the year ended June 30, 2026, marking its strongest performance in three years, indicating a robust dry bulk market compared to recent historical performance.
• Crude tanker spot rates, particularly for VLCCs, reached unprecedented historical peaks due to the U.S.-Iran conflict, decoupling rates from standard supply-and-demand fundamentals.
• The filing mentions that the BDRY Benchmark Portfolio is maintained by Breakwave and rebalanced annually, which is a standard practice for such ETFs.
• The expense caps for both BDRY and BWET are set at 3.50% (excluding certain fees), which is a common structure to manage investor costs in ETF products.
• The structure of BDRY and BWET, tracking futures contracts on freight rates, aligns with industry trends for commodity-focused ETFs seeking to provide specific market exposures.

Legal Proceedings

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

Related Party Transactions

• Amplify Investments LLC acts as the Sponsor and Commodity Pool Operator for the Trust and its Funds.
• Breakwave Advisors LLC serves as the Commodity Trading Advisor (CTA) for both BDRY and BWET.
• Fees are paid to the Sponsor for management and wholesale support services.
• Fees are paid to Breakwave for CTA services.
• U.S. Bank and its affiliate U.S. Bancorp Fund Services provide administrative, accounting, custody, and transfer agent services.
• Foreside Fund Services, LLC acts as the Distributor.
• Wilmington Trust Company serves as the Trustee.

Stakeholder Impact

• Shareholders of BDRY and BWET have experienced significant gains in the fiscal year ended June 30, 2026, particularly in BWET due to geopolitical events.
• The continued expense caps and potential fee waivers by the Sponsor and Breakwave benefit shareholders by limiting overall expenses through December 31, 2026.
• The volatility in freight markets, while driving gains, also presents substantial risks of loss for shareholders.
• Future changes in expense caps or fee waiver agreements beyond December 31, 2026, could impact shareholder returns.
• Regulatory changes in the futures and derivatives markets could affect the Funds' operations and potentially impact shareholders.

Next Steps

• The BDRY Benchmark Portfolio will be rebalanced annually.
• The BWET Benchmark Portfolio will be rebalanced annually.
• The Sponsor and Breakwave have contractual obligations regarding expense caps and CTA fee waivers through December 31, 2026. Future actions beyond this date will depend on renewed agreements or market conditions.
• The Funds will continue to monitor market conditions, geopolitical events, and regulatory changes that could impact their investment strategies and performance.

Key Dates

Recommendation

While both ETFs showed exceptional gains in FY2026, particularly BWET due to geopolitical factors, the inherent volatility and the high probability of a sharp correction in tanker rates, coupled with potential headwinds in dry bulk, warrant a cautious approach. The 'hold' recommendation reflects the current strong performance but acknowledges the significant risks and uncertainties associated with the underlying commodity markets and geopolitical landscape.

Keywords

Dry Bulk Shipping ETF, Tanker Shipping ETF, Freight Futures, Commodity Trust, Baltic Exchange, Crude Oil Tanker, BDRY, BWET