Direxion Auspice Broad Commodity Strategy ETF (COM)

Overview

The Direxion Auspice Broad Commodity Strategy ETF (COM) seeks capital appreciation by investing in commodity futures contracts. It utilizes a rules-based, trend-following strategy across multiple commodity sectors to potentially profit from rising commodity prices while managing risk.

Reputation and Reliability

Direxion is a well-known issuer specializing in leveraged and inverse ETFs. Their reputation is mixed, as these types of ETFs are generally considered riskier investments.

Management Expertise

Direxion partners with Auspice Capital Advisors to manage the commodity strategy. Auspice brings specialized expertise in commodity trading and trend-following methodologies.

Goal

To seek capital appreciation by investing in a portfolio of commodity futures contracts.

Investment Approach and Strategy

Strategy: The ETF employs a rules-based, trend-following strategy that systematically allocates capital across various commodity sectors based on price trends.

Composition The ETF's portfolio primarily consists of commodity futures contracts across sectors like energy, agriculture, metals, and softs.

Market Share: The Direxion Auspice Broad Commodity Strategy ETF holds a relatively small market share compared to larger, more established broad commodity ETFs.

Total Net Assets (AUM): 28660000

Key Competitors

• Invesco DB Commodity Index Tracking Fund (DBC)
• iShares GSCI Commodity Indexed Trust (GSG)
• WisdomTree Enhanced Commodity Strategy Fund (GCC)

Competitive Landscape

The commodity ETF market is competitive, dominated by larger funds tracking broad commodity indices. COM differentiates itself with its trend-following strategy, which may offer advantages in certain market environments, but its smaller size and higher expense ratio can be disadvantages.

Historical Performance: Historical performance varies with commodity market trends. Examine specific time periods (e.g., 1yr, 3yr, 5yr) for detailed returns.

Benchmark Comparison: The ETF's performance should be compared to broad commodity indices and other actively managed commodity funds to assess its strategy's effectiveness.

Expense Ratio: 0.78

Average Trading Volume

Average trading volume is moderate, indicating sufficient liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is generally reasonable but can widen during periods of market volatility.

Market Environment Factors

Economic growth, inflation, geopolitical events, and supply/demand dynamics in individual commodity markets all influence the ETF's performance.

Growth Trajectory

Growth trajectory is dependent on the effectiveness of the trend-following strategy in capturing commodity price movements and market volatility.

Competitive Edge

COM's trend-following strategy aims to outperform traditional commodity index tracking by dynamically adjusting its commodity allocations based on price momentum. This may allow it to capture upside potential while mitigating downside risk. However, this strategy is susceptible to whipsaws and incorrect signals that could adversely impact performance in certain commodity markets. Smaller AUM, as compared to DBC, GSG, and GCC, may impact access to commodities.

Volatility

The ETF is expected to be volatile due to the inherent volatility of commodity futures markets. Examine historical volatility measures (e.g., standard deviation) to assess its risk profile.

Market Risk

The ETF is exposed to market risk, including fluctuations in commodity prices, changes in supply and demand, and geopolitical events impacting commodity production and distribution.

Ideal Investor Profile

Investors seeking exposure to commodities as part of a diversified portfolio, with a higher risk tolerance and understanding of futures contracts and trend-following strategies, may find COM suitable.

Market Risk

This ETF is best suited for sophisticated investors with a medium to long-term investment horizon who seek to capitalize on commodity price trends.

The Direxion Auspice Broad Commodity Strategy ETF seeks capital appreciation through a trend-following commodity futures strategy. While it offers a potentially differentiated approach to commodity investing, its smaller size and active management come with higher expenses and inherent risks. The success of the fund relies heavily on the efficacy of its trend-following system in anticipating commodity price movements. Therefore, investors should carefully consider their risk tolerance and investment objectives before investing. Investors should be aware that smaller AUMs, relative to peers, may impact access to certain commodities.

Data Sources:

• Direxion
• ETF.com
• Morningstar

Disclaimers:

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