Direxion Auspice Broad Commodity Strategy ETF (COM)

Overview

The Direxion Auspice Broad Commodity Strategy ETF (COM) seeks long-term capital appreciation by investing in commodity futures contracts. It employs a rules-based strategy that combines trend following and diversification across various commodities.

Reputation and Reliability

Direxion is known for its leveraged and inverse ETFs, as well as thematic and commodity-focused funds. They have a moderate track record in the market, but their complexity may require investors to have a higher degree of understanding and due diligence.

Management Expertise

Direxion leverages Auspice Capital Advisors Ltd.'s expertise for managing the commodity strategy. They employ a rules-based approach, aiming to systematically allocate to different commodity sectors.

Goal

The primary investment goal is long-term capital appreciation.

Investment Approach and Strategy

Strategy: The ETF uses a dynamic, rules-based approach that combines trend following and diversification across the commodity sector using commodity futures contracts.

Composition The ETF primarily holds futures contracts across various commodity sectors, including energy, agriculture, and metals. Collateral for these futures contracts is held in cash and cash equivalents.

Market Share: The Direxion Auspice Broad Commodity Strategy ETF's market share in the broad commodity ETF sector is relatively small.

Total Net Assets (AUM): 31

Key Competitors

• Invesco DB Commodity Index Tracking Fund (DBC)
• iShares S&P GSCI Commodity Indexed Trust (GSG)
• Teucrium Wheat Fund (WEAT)

Competitive Landscape

The broad commodity ETF market is competitive, with several large ETFs dominating market share. COM differentiates itself through its active, rules-based approach aiming to outperform traditional commodity indexes. COM may have smaller AUM, leading to liquidity concerns for some investors.

Historical Performance: Historical performance varies significantly based on commodity market conditions. Investors should review performance data across different timeframes.

Benchmark Comparison: The ETF's performance should be compared to broad commodity indices like the S&P GSCI or Bloomberg Commodity Index to assess its effectiveness.

Expense Ratio: 0.78

Average Trading Volume

The average trading volume is moderate, which can impact the ease of buying and selling shares.

Bid-Ask Spread

The bid-ask spread can fluctuate, especially during periods of market volatility, affecting transaction costs.

Market Environment Factors

Economic growth, inflation, supply chain disruptions, and geopolitical events significantly influence commodity prices and, therefore, the ETF's performance.

Growth Trajectory

The ETF's growth trajectory depends on its ability to deliver consistent returns relative to its benchmark and attract investor interest in commodity-based strategies. Any changes to the Auspice commodity strategy would impact holdings.

Competitive Edge

The ETF's primary advantage is its rules-based, active approach to commodity investing, aiming to generate alpha. Its dynamic strategy seeks to capitalize on commodity market trends while mitigating risks through diversification. However, the complexity of the strategy might make it less appealing to passive investors.

Volatility

Commodity markets are inherently volatile, and the ETF can experience significant price fluctuations.

Market Risk

The ETF is exposed to commodity price risk, geopolitical risk, and the risk of futures contract roll yield, which can negatively impact returns.

Ideal Investor Profile

The ideal investor is someone seeking commodity exposure for diversification or inflation hedging purposes and who understands the risks associated with commodity futures.

Market Risk

This ETF may be suitable for sophisticated investors with a higher risk tolerance seeking active commodity exposure as part of a diversified portfolio.

The Direxion Auspice Broad Commodity Strategy ETF offers a actively-managed approach to investing in broad commodities through futures contracts. It seeks long-term capital appreciation by using a trend-following strategy and diversification across sectors. Investors should consider the high volatility of the commodity markets and the potential for significant price fluctuations. With a low AUM and high expense ratio, investors may look to other commodity ETFs before investing in COM. Potential investors are sophisticated investors who are seeking commodity exposure as part of a diversified portfolio and understand the intricacies of futures contracts.

• DBC
• GSG
• PDBC
• DJCI
• BCI

Data Sources:

• Direxion
• ETF.com
• Bloomberg
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Investors should consult with a financial advisor before making any investment decisions.