Direxion Auspice Broad Commodity Strategy ETF (COM)

Overview

The Direxion Auspice Broad Commodity Strategy ETF (COM) seeks long-term capital appreciation by investing in a portfolio of commodity futures contracts. It utilizes a quantitative, rules-based strategy developed by Auspice Capital Advisors.

Reputation and Reliability

Direxion is known for its leveraged and inverse ETFs. While innovative, it requires careful investor understanding and is best used for short-term trading strategies.

Management Expertise

Direxion partners with Auspice Capital Advisors for the commodity strategy expertise in this fund.

Goal

To seek long-term capital appreciation by investing in commodity futures.

Investment Approach and Strategy

Strategy: The ETF does not track a specific index. It uses a quantitative strategy based on trend following across a broad range of commodities.

Composition The ETF holds commodity futures contracts across various sectors, including energy, agriculture, metals, and livestock.

Market Share: COM's market share within the broad commodity ETF space is relatively small compared to larger, more established funds.

Total Net Assets (AUM): 97620992

Key Competitors

• Invesco DB Commodity Index Tracking Fund (DBC)
• iShares GSCI Commodity Indexed Trust (GSG)
• United States Commodity Index Fund (USCI)

Competitive Landscape

The commodity ETF market is competitive, dominated by large, well-established funds like DBC and GSG. COM's quantitative strategy and Auspice's expertise differentiate it, but its smaller size impacts liquidity and visibility. COM's advantage lies in its potential for outperformance during specific trend-following environments, but its disadvantage is potential underperformance in range-bound markets.

Historical Performance: Historical performance can be found on financial websites, and should be analyzed for various time periods like 1 year, 3 year and 5 year returns.

Benchmark Comparison: Comparison against a broad commodity index like the Bloomberg Commodity Index is crucial to assess COM's value-add from its active strategy.

Expense Ratio: 0.79

Average Trading Volume

COM's average trading volume is moderate, suggesting reasonable but not exceptionally high liquidity.

Bid-Ask Spread

The bid-ask spread is moderate, impacting trading costs, especially for large orders.

Market Environment Factors

Economic growth, inflation expectations, supply chain disruptions, and geopolitical events significantly impact commodity prices and, consequently, COM's performance.

Growth Trajectory

COM's growth is tied to its ability to attract assets by delivering superior risk-adjusted returns compared to its peers; no major changes to strategy or holdings are apparent recently.

Competitive Edge

COM's competitive advantage lies in its quantitatively driven, trend-following strategy managed in partnership with Auspice Capital Advisors, offering a unique approach compared to passively tracking broad commodity indexes. This strategy seeks to capitalize on price trends in commodity markets, potentially offering higher returns during trending periods. It employs a rules-based approach to manage risk and dynamically adjust commodity exposures based on market conditions. However, its performance is highly dependent on the prevalence and persistence of commodity price trends.

Volatility

Commodity markets are inherently volatile, and COM's exposure to futures contracts amplifies this volatility. Investors should expect fluctuations in the ETF's value.

Market Risk

Specific risks include commodity price fluctuations, roll yield effects in futures contracts, and the potential for the quantitative strategy to underperform in certain market environments.

Ideal Investor Profile

The ideal investor is sophisticated, understands commodity futures and trend-following strategies, and seeks diversification beyond traditional asset classes.

Market Risk

COM is suitable for investors with a higher risk tolerance seeking tactical commodity exposure and not for passive, long-term index followers.

Direxion Auspice Broad Commodity Strategy ETF (COM) provides exposure to a diversified basket of commodities through a unique trend-following strategy. It offers a potential diversifier within a portfolio, but its performance hinges on commodity market trends. The ETF's moderate liquidity and expense ratio should be carefully considered. Investors need to understand the risks associated with commodity futures and the active management approach before investing in COM, because the return will be dependent on the prevalence and persistence of commodity price trends.

Data Sources:

• Direxion
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Market conditions and ETF performance are subject to change.