A new ETF offering investors pure-play exposure to tanker shipping futures launched on the New York Stock Exchange today.
The ETF, known as the Breakwave Tanker Shipping ETF (NYSE Arca: BWET), is a collaboration between Breakwave Advisors and ETF Managers Group LLC (ETFMG®). It is the first of its kind to grant long exposure to the crude oil tanker shipping sector via a collection of near-dated futures contracts based on indices that gauge the expense of crude oil transportation.
BWET offers investors access to crude oil freight futures through the convenience of ETF trading. Its launch comes amid rising geopolitical tensions, such as Russia’s invasion of Ukraine, have disrupted oil flow and altered traditional shipping routes. In addition, increasing demand and changing environmental regulations will persistently influence the cost of crude oil transport worldwide, presenting a distinct investment opportunity in the coming years.
Breakwave Advisors, a commodity trading advisor specializing in shipping and freight investments, launched the dry bulk shipping ETF (BDRY) in 2018.
John Kartsonas, the founder and managing partner of Breakwave Advisors, expressed enthusiasm for the novel product. “We are excited to launch such an innovative product, catering to another aspect of the shipping industry—tankers,” he said.
Kartsonas emphasized the growing significance of the tanker market in terms of energy security and the substantial returns the sector can generate over a full cycle.
Kartsonas elaborated on the challenges faced by the tanker industry today, including high demand for oil transportation, limited vessel availability, disruptions to traditional shipping routes, and extended shipping distances due to major geopolitical shifts impacting oil markets. “Similar to BDRY, BWET enables all market participants to directly invest in a market that is otherwise difficult to access, using a simple, transparent, equity-like investment product,” he said.
Matthew Bromberg, COO of ETFMG, highlighted the growing demand for exposure to the supply chain.
“There is underinvestment in shipping capacity, and crude oil tankers account for nearly one-third of the global shipping transportation capacity. BWET is the first of its kind to offer this unique access to oil transport futures contracts,” said Bromberg.
BWET’s holdings will consist of crude oil tanker futures contracts with an average of approximately three months until expiration, employing a blend of one- to six-month freight futures based on the current calendar schedule. The Fund plans to gradually increase its position in the next calendar quarter three-month strip while maintaining existing positions and settling in cash. The initial allocation for tanker crude oil freight futures will be 90% Very Large Crude Carriers (VLCC) contracts and 10% Suezmax contracts, rebalancing on an annual basis.
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