Direxion launches breakfast commodities ETF
Direxion, the leveraged and inverse ETF specialist, has launched a commodity futures ETF that targets breakfast-related commodities.
The Direxion Breakfast Commodities Strategy ETF (BRKY) tracks the S&P GSCI Dynamic Roll Breakfast (OJ 5% Capped) Index.
The index is made of futures contracts for six commodities: corn, coffee, lean hogs, orange juice concentrate, sugar, and wheat. The commodities are weighted by production, which gives the following weights: Corn 40.58%. Wheat 29.41%. Lean Hogs 10.37%. Sugar 9.28%. Coffee 5.58%. OJ 4.78%.
The logic for targeting these commodities is that they are all seeing their prices rise thanks to global inflation. Inflation is mostly being driven by Russia’s commodity export ban, which has hobbled global supply.
The index allows for a flexible rolling strategy, with annual rebalances.
The fund charges 0.70%.
Bernie’s commentary – brilliant
I don’t remember the last time I saw an ETF nail the marketing component so thoroughly. The ticker: BRKY. It’s brilliant. The fund name: Breakfast ETF. Fantastic. And even the whole concept of organising a commodity ETF around breakfast is a great idea. It makes these obscure futures-based ETFs at once more relatable and more newsworthy.
The timing of the launch is also practically perfect. Inflation is here to stay, thanks to Russia’s war with Ukraine and Russia’s export ban on its commodities. As Russia has gone to war, most of the English language media has been a bit propagandistic in its coverage. The media has systematically underplayed just how serious and long-term commodity inflation will be because of Russian supply exiting word trade. It will hit poorer countries the hardest, as they rely on Russian exports. Russia’s export ban on grain in 2010 – 2011 is often cited as one of the causes of the Arab Spring.
What is more, as the ETF uses futures it gives investors access to something they cannot so easily access themselves. Thus anyone complaining the fee is high can be invited to implement the strategy themselves.
As an aside—I’m noticing the quality of ETF launches the past month has improved. I’m guessing that with the downturn in the market, ETF providers are only putting out their best ideas.
