Breakwave Advisors, in partnership with ETF Managers Group (ETFMG), has announced that the Breakwave Tanker Shipping ETF (NYSE Arca: BWET) will begin trading today on the New York Stock Exchange.
The firm writes that BWET is the world’s first ETF designed to provide long exposure to the crude oil tanker shipping market through a portfolio of near-dated futures contracts on indices that measure the cost of shipping crude oil.
Geopolitical tensions have impacted oil flows and shifted traditional routes, the firm says, adding increasing demand and evolving environmental regulations will continue to impact the cost of transporting crude oil worldwide, creating a unique investment opportunity for the years to come. The firm says that BWET provides investors with direct exposure to crude oil freight futures with the simplicity of trading an ETF.
“We are thrilled to introduce such an innovative product to the market, targeting another segment of the shipping industry, namely tankers,” says John Kartsonas, founder and managing partner of Breakwave Advisors, a commodity trading adviser based in New York City specialising in shipping and freight investments. “The tanker market has recently shown its growing importance when it comes to energy security as well as the significant returns the sector can generate over the full cycle.”
“Today, the tanker industry is faced with high demand for oil transportation, a limited vessel orderbook, disruptions in the traditional shipping routes, and longer shipping distances as a result of the major geopolitical changes affecting the oil markets,” Kartsonas adds. “As has been the case with BDRY, BWET allows all market participants to directly invest in an otherwise difficult to access market using a simple, transparent, equity-like investment product.”
“We’ve seen that investors are seeking exposure to the supply chain,” says Matthew Bromberg, COO of ETFMG. “There is an under investment in shipping capacity and crude oil tankers represent nearly one-third of the global shipping transportation capacity. BWET is the first of its kind to provide this unique access to oil transport futures contracts.”
BWET will hold crude oil tanker futures contracts with a weighted average of approximately three months to expiration, using a mix of one- to six-month freight futures, based on the prevailing calendar schedule. The fund intends to progressively increase its position to the next calendar quarter three-month strip while existing positions are maintained and settle in cash. The initial tanker crude oil freight futures allocation will be 90 per cent Very Large Crude Carriers (VLCC) contracts and 10 per cent Suezmax contracts, rebalancing annually.
ETF Express interviewed John Kartsonas in 2021:
