10-Q: Amplify Commodity Trust Reports Strong Performance for BDRY in Q2 2024 Amidst Sponsor Transition
Quarterly Report
Amplify Commodity Trust's BDRY ETF saw significant gains in Q2 2024, driven by dry bulk freight futures, while undergoing a change in sponsorship from ETF Managers Capital LLC to Amplify Investments LLC.
Summary
- Amplify Commodity Trust, formerly ETF Managers Group Commodity Trust I, released its quarterly report for the period ended December 31, 2023.
- The Trust consists of two series: Breakwave Dry Bulk Shipping ETF (BDRY) and Breakwave Tanker Shipping ETF (BWET).
- Effective February 15, 2024, Amplify Investments LLC replaced ETF Managers Capital LLC as the Sponsor.
- BDRY's investment objective is to provide exposure to the daily change in the price of dry bulk freight futures.
- BWET's investment objective is to provide exposure to the daily change in the price of crude oil tanker freight futures.
- During the three months ended December 31, 2023, BDRY's market value per share increased by 110.56% to $11.56, and its net asset value (NAV) per share increased by 111.64% to $11.64.
- During the three months ended December 31, 2023, BWET's market value per share increased by 2.41% to $16.15, and its net asset value (NAV) per share increased by 3.62% to $16.04.
- For the six months ended December 31, 2023, BDRY's market value per share increased by 108.29% to $11.56, and its net asset value per share increased by 110.49% to $11.64.
- For the six months ended December 31, 2023, BWET's market value per share decreased by 22.65% to $16.15, and its net asset value per share decreased by 23.00% to $16.04.
Sentiment
Score: 7
Explanation: The sentiment is moderately positive due to the strong performance of BDRY, offset by the weaker performance of BWET and the various risk factors mentioned in the report.
Positives
- BDRY experienced significant gains in both market value and net asset value per share during the reported periods.
- The change in sponsorship is not expected to impact shareholders' investments.
- BDRY closely tracked the performance of short-term dry bulk freight futures.
- BWET closely tracked short-dated freight futures for VLCCs (TD3C).
Negatives
- BWET's market value and net asset value per share decreased during the six months ended December 31, 2023.
- BWET's expectations for a seasonally strong quarter did not materialize due to oil production cuts by OPEC+.
Risks
- Fluctuations in spot charter rates can materially impact the NAV of BDRY and BWET shares.
- The Russia-Ukraine war poses risks to global economic growth and commodity prices, potentially affecting demand for dry bulk and tanker shipping.
- Geopolitical turmoil, such as the conflict between Hamas and Israel, could lead to oil supply instability and impact freight rates.
- Liquidity risk exists if the Funds cannot dispose of holdings quickly or at prices representing market value in an orderly market.
- Natural disasters and epidemics, such as COVID-19, can disrupt economies and markets, leading to increased volatility and losses.
Future Outlook
The report mentions expectations for the next quarter to be relatively strong for dry bulk freight rates, despite historical trends, and relatively tepid economic growth for 2024 potentially negatively impacting the crude tanker market.
Industry Context
The report discusses the impact of reduced sailing through the Panama and Suez Canals, attacks on commercial vessels in the Red Sea, and OPEC+ oil production cuts on the shipping sector.
Comparison to Industry Standards
- BDRY is the only Freight futures ETF globally, making direct comparisons difficult.
- BWET's performance can be compared to other tanker shipping investments, but the report does not provide specific comparisons to competitors.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Sponsor | ETF Managers Capital LLC | Amplify Investments LLC | February 15, 2024 | Transfer Agreement |
Stakeholder Impact
- Shareholders of BDRY experienced significant gains in their investments.
- Shareholders of BWET experienced losses in their investments.
- The change in sponsorship is not expected to impact shareholders' investments.
Key Dates
| Date | Description |
|---|---|
| July 23, 2014 | Amplify Commodity Trust (formerly, ETF Managers Group Commodity Trust I) was organized as a Delaware statutory trust. |
| March 22, 2018 | BDRY commenced investment operations and trading on the NYSE Arca. |
| May 3, 2023 | BWET commenced investment operations and trading on the NYSE Arca. |
| December 31, 2023 | End of the reporting period for the quarterly report. |
| February 1, 2024 | The registrant had 4,050,040 outstanding shares as of February 1, 2024 (BDRY) and 825,100 outstanding shares as of February 1, 2024 (BWET). |
| February 14, 2024 | Effective after the close of trading on February 14, 2024, ETF Managers Capital LLC resigned as Sponsor to the Trust and transferred its role as the Trusts sponsor to Amplify Investments LLC. |
| February 15, 2024 | Effective February 15, 2024, the Funds are managed and controlled by Amplify in its capacity as sponsor for the Trust. |
| February 20, 2024 | Date of the report. |
Keywords
BDRY, BWET, Amplify Commodity Trust, Breakwave Dry Bulk Shipping ETF, Breakwave Tanker Shipping ETF, Dry Bulk Freight Futures, Crude Oil Tanker Freight Futures, Sponsor, ETF, Commodity Pool, Freight Futures
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