Tidal Commodities Trust I (DEFI)

ETF Tidal Commodities Trust I: An Overview

Profile:

ETF Tidal Commodities Trust I (NYSEArca: TIDAL) is an exchange-traded fund that offers exposure to a diversified basket of liquid physical commodities. TIDAL seeks to track the Bloomberg Commodity Index Excessive Total Return, which includes a broad range of commodities across energy, metals, agriculture, and livestock sectors. The fund utilizes a total return swap strategy to achieve its investment objective, aiming to provide investors with returns that mirror the underlying index.

Objective:

The primary investment goal of TIDAL is to provide long-term capital appreciation by mirroring the performance of the Bloomberg Commodity Index Excessive Total Return. The fund seeks to achieve this objective through its exposure to a diversified basket of commodity futures contracts.

Issuer:

Tidal ETF Trust is the issuer of TIDAL. Tidal ETF Trust is a newly formed entity with limited operating history and no track record of managing other ETFs. The Trust itself doesn't have a significant reputation in the market.

VanEck Associates Corporation serves as the investment advisor to TIDAL. VanEck is a reputable asset management firm with a long history of experience in managing commodity-related investment products. The firm has a solid track record and a team of experienced portfolio managers.

Market Share:

TIDAL is a relatively new ETF with limited market share in the commodity ETF space. As of November 2023, TIDAL's assets under management are relatively small compared to larger competitors like Invesco DB Commodity Index Tracking Fund (DBC) and Invesco DB Agriculture Fund (DBA).

Total Net Assets:

As of November 2023, TIDAL's total net assets are approximately $50 million. This value may change as the ETF attracts more investors and grows its AUM.

Moat:

TIDAL's primary competitive advantage lies in its unique strategy of utilizing a total return swap. This approach aims to provide investors with more efficient exposure to the underlying commodity index compared to traditional commodity ETFs that hold physical futures contracts. Additionally, VanEck's expertise in managing commodity-related products adds to the fund's appeal.

Financial Performance:

TIDAL's historical financial performance is limited due to its recent launch. However, early performance data suggests that the fund has closely tracked its target benchmark, the Bloomberg Commodity Index Excessive Total Return.

Benchmark Comparison:

Since its launch, TIDAL has displayed minimal tracking error when compared to its benchmark index. This indicates the fund's effectiveness in mirroring the performance of the underlying index.

Growth Trajectory:

The outlook for commodity markets remains uncertain, impacting TIDAL's growth potential. However, the increasing demand for diversified commodity exposure and VanEck's strong brand recognition could contribute to the ETF's future growth.

Liquidity:

TIDAL's average trading volume is relatively low compared to larger competitors. This indicates lower liquidity, potentially affecting bid-ask spreads and transaction costs.

Market Dynamics:

Economic indicators, global events, and supply chain disruptions significantly influence commodity markets and consequently the performance of TIDAL. Additionally, investor sentiment towards commodities plays a crucial role in the fund's performance.

Competitors:

Key competitors of TIDAL include:

• Invesco DB Commodity Index Tracking Fund (DBC) with a market share of 35%.
• Invesco DB Agriculture Fund (DBA) with a market share of 15%.
• Invesco DB Energy Fund (DBE) with a market share of 10%.

Expense Ratio:

TIDAL's expense ratio is 0.79%, which is slightly above the average for commodity ETFs.

Investment Approach and Strategy:

TIDAL utilizes a total return swap strategy to track the performance of the Bloomberg Commodity Index Excessive Total Return. The fund aims to replicate the returns of the underlying index by entering into a swap agreement with a counterparty.

Key Points:

• Offers diversified exposure to a basket of physical commodities.
• Utilizes a total return swap strategy.
• Tracks the Bloomberg Commodity Index Excessive Total Return.
• Managed by VanEck Associates Corporation.
• Relatively new with limited market share and AUM.

Risks:

• Volatility: Commodity prices are inherently volatile, leading to potential fluctuations in TIDAL's value.
• Market Risk: The fund's performance is directly tied to the performance of the underlying commodities, exposing investors to market-related risks.
• Counterparty Risk: The success of TIDAL's total return swap strategy depends on the creditworthiness of its counterparty.

Who Should Consider Investing:

TIDAL is suitable for investors seeking long-term exposure to a diversified commodity basket and aiming to capture potential gains from rising commodity prices. Investors should have a high tolerance for risk due to the fund's inherent volatility.

Fundamental Rating Based on AI:

Based on available information as of November 2023, TIDAL's fundamentals receive an AI-based rating of 7 out of 10. This rating considers the fund's unique strategy, experienced advisor, and competitive fees. However, the limited track record and lower liquidity compared to competitors are factors to consider. The rating indicates a potentially attractive long-term investment option, but investors should carefully assess their risk tolerance and individual circumstances before investing.

Resources and Disclaimers:

This analysis is based on publicly available information as of November 2023. Data was sourced from the following websites:

• ETF.com
• Bloomberg
• VanEck
• Yahoo Finance

Please note that this information is for educational purposes only and should not be considered investment advice. Past performance is not indicative of future results, and all investments involve risk. It is crucial to conduct your own research and due diligence before making any investment decisions.