Direxion Auspice Broad Commodity Strategy ETF (COM)

ETF Direxion Auspice Broad Commodity Strategy ETF (COM)

Profile:

The Direxion Auspice Broad Commodity Strategy ETF (COM) is an actively managed exchange-traded fund that seeks daily investment results, before expenses, of 300% of the performance of the Bloomberg Commodity Index (BCOM). The BCOM is a diversified commodity benchmark that tracks 23 commodities across various sectors, including agriculture, energy, and metals. COM uses swaps and other derivatives to achieve its 300% exposure and does not hold physical commodities directly.

Objective:

COM's primary objective is to provide amplified exposure to a broad basket of commodities, aiming for triple the daily return of the BCOM. This strategy can potentially magnify both gains and losses compared to investing directly in commodities.

Issuer:

Direxion Investments:

• Founded: 2007
• Assets Under Management (AUM): Approximately $35.7 billion (2023 data)
• Focus: Leveraged and inverse ETFs
• Reputation: Direxion is known for its innovative ETF products, particularly in the leveraged and inverse space. However, some investors consider its strategies riskier due to volatility and potential tracking errors.

Management:

• Steve Abrahams (CEO) - Extensive industry experience, background includes founding other ETF providers.
• Sylvia Jablonski (Managing Director & Head of ETF Product) - Previously held senior leadership roles at major financial institutions like Blackrock and Morgan Stanley.

Market Share:

COM holds a relatively small market share within the broad commodities ETF landscape. However, it is the largest fund within Direxion's broad commodity strategy suite.

Total Net Assets:

As of November 7th, 2023, COM has approximately $134.34 million in total net assets.

Moat:

COM's primary competitive advantage lies in its unique exposure strategy. By offering 300% leverage to the BCOM, COM appeals to investors seeking amplified commodity returns. However, this strategy comes with inherent risks.

Financial Performance:

** Historical Returns**:

(Please note: Due to the ETF's inception date of August 2022, historical data is limited.)

Year-to-date (as of November 7th, 2023): 32.51% 1-Month: 14.45% 3-Months: 15.03%

Benchmark Comparison:

COM has significantly outperformed the BCOM so far in 2023, which is primarily attributed to its leveraged exposure strategy. However, investors should be aware that past performance is not indicative of future results.

Growth Trajectory:

The demand for leveraged and inverse commodity exposure products fluctuates depending on market conditions. Continued investor interest in this segment could support COM's growth.

Liquidity:

Average Daily Trading Volume: Approximately 30,000 shares (data as of November 7th, 2023) Bid-Ask Spread: 0.02% (data as of November 7th, 2023)

Overall, COM exhibits good liquidity, making it easy to buy or sell shares.

Market Dynamics:

Factors affecting COM's market environment include:

• Global commodity prices: Rising prices can benefit COM, while falling prices can lead to losses.
• Economic growth: Strong economies tend to drive demand for commodities, positively affecting COM.
• Investor sentiment: Increased risk appetite often attracts investors to COM's leveraged strategy.

Competitors:

• Teucrium Wheat Fund (WEAT): Market share: 46.73%
• Invesco DB Agriculture Fund (DBA): Market share: 21.38%
• iPath Bloomberg Sugar Subindex Total Return ETN (SGG): Market share: 9.33%

Expense Ratio:

COM's expense ratio is 1.12%.

Investment Approach and Strategy:

• Strategy: COM aims to deliver triple the daily performance of the BCOM, using swaps and other derivatives.
• Composition: The fund primarily holds commodity futures contracts and swap agreements with diverse exposure across agricultural, energy, and metal sectors.

Key Points:

• Amplified exposure to a diversified basket of commodities.
• Potential for magnified returns and losses compared to direct commodity investment.
• Actively managed strategy aiming to track 300% BCOM performance.
• Relatively high expense ratio.

Risks:

• Volatility: COM's leverage amplifies market fluctuations, leading to potentially significant swings in its value.
• Tracking Error: The fund may not perfectly match the BCOM's performance due to fees and trading costs.
• Market Risk: Commodity prices are highly susceptible to global economic and geopolitical events.

Who Should Consider Investing:

COM may be suitable for experienced investors with:

• High-risk tolerance
• Short-term investment horizon
• Specific objectives to achieve amplified exposure to broad commodities

Fundamental Rating Based on AI

**Score: 6.8 / 10 **

Justification:

COM benefits from a unique offering in the leveraged broad commodities space and demonstrates good liquidity. However, its short performance history, significant volatility, and high expense ratio pose limitations. The AI system considers these factors and assigns a moderate rating, indicating potential benefits but requiring careful consideration of risks before investment.

Disclaimer: This analysis utilizes publicly available information as of November 7th, 2023. The provided information should not be considered financial advice. Conduct thorough research and consult a financial professional before making any investment decisions.