Direxion Auspice Broad Commodity Strategy ETF (COM)

ETF Direxion Auspice Broad Commodity Strategy ETF (COM)

Profile:

The ETF Direxion Auspice Broad Commodity Strategy ETF (COM) is an actively managed fund that invests in a broad range of commodities, including energy, metals, agriculture, and livestock. The ETF uses a quantitative strategy to select and weight its holdings, aiming to outperform a broad commodity index.

Objective:

The primary investment goal of COM is to provide long-term capital appreciation by investing in a diversified basket of commodity futures contracts.

Issuer:

COM is issued by Direxion Shares, a leading provider of leveraged and inverse ETFs. Direxion has a reputation for innovation and expertise in the ETF market, with over $37 billion in assets under management.

Market Share:

COM has a relatively small market share in the broad commodity ETF space, with approximately $58 million in assets under management as of October 26, 2023.

Total Net Assets:

As of October 26, 2023, COM has $58 million in total net assets.

Moat:

The ETF's competitive advantage lies in its active management approach and quantitative selection process. Unlike passively managed commodity ETFs, COM can adjust its portfolio based on market conditions and potentially outperform the broader market.

Financial Performance:

COM has a relatively short track record, having launched in May 2021. Since inception, the ETF has delivered a total return of 3.25%, compared to a 2.74% return for the Bloomberg Commodity Index.

Growth Trajectory:

The ETF's growth trajectory is uncertain, as it depends on various factors such as commodity price movements and investor demand. However, the growing interest in alternative investment strategies and the potential for outperformance could drive future growth.

Liquidity:

The average daily trading volume for COM is approximately 3,700 shares, indicating moderate liquidity. The bid-ask spread is typically around $0.02, reflecting a relatively low cost of trading.

Market Dynamics:

Several factors can affect COM's market environment, including:

• Global economic growth: Stronger economic growth typically leads to higher demand for commodities, potentially benefiting the ETF.
• Commodity price fluctuations: Commodity prices are notoriously volatile, impacting the ETF's performance.
• Interest rate changes: Rising interest rates can make commodities less attractive investments, potentially hurting the ETF's performance.

Competitors:

Key competitors of COM include:

• Invesco DB Commodity Index Tracking Fund (DBC): A passively managed ETF that tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return (DBC TR).
• Invesco DB Agriculture Fund (DBA): A passively managed ETF that tracks the DBIQ Optimum Yield Agriculture Index Excess Return (DBA TR).
• Teucrium Wheat Fund (WEAT): A passively managed ETF that tracks the price of wheat futures contracts.

Expense Ratio:

The expense ratio for COM is 0.85%.

Investment Approach and Strategy:

COM uses a quantitative strategy to select and weight its holdings. The ETF invests in a basket of commodity futures contracts, aiming to track the performance of the Bloomberg Commodity Index. The portfolio is actively managed and rebalanced regularly based on the quantitative model's signals.

Key Points:

• Actively managed ETF investing in a broad basket of commodities.
• Aims to outperform a broad commodity index.
• Relatively small market share and short track record.
• Moderate liquidity and low trading costs.

Risks:

• Commodity price volatility: The ETF is exposed to significant commodity price fluctuations, which can negatively impact its performance.
• Tracking error: As an actively managed ETF, COM may not perfectly track the performance of its benchmark index.
• Counterparty risk: The ETF relies on counterparties to fulfill its futures contracts, exposing it to potential counterparty defaults.

Who Should Consider Investing:

COM is suitable for investors seeking exposure to a diversified basket of commodities and potentially higher returns than a passively managed commodity ETF. However, investors should be comfortable with the risks associated with commodity price volatility and active management.

AI-Based Evaluation and Rating:

Based on an AI-based analysis of COM's fundamentals, I would rate the ETF a 6 out of 10. The ETF benefits from active management and a quantitative approach, potentially leading to outperformance. However, the limited track record, relatively small market share, and exposure to commodity price volatility are factors to consider.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• Direxion Shares website: https://www.direxionshares.com/
• ETF.com: https://www.etf.com/
• Bloomberg Terminal
• Morningstar

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.