10-K: Amplify Commodity Trust Reports Annual Results for Fiscal Year 2024, BDRY Sees Strong Gains While BWET Declines

Amplify Commodity Trust's annual report reveals a significant increase in the share price and net asset value of the Breakwave Dry Bulk Shipping ETF (BDRY), while the Breakwave Tanker Shipping ETF (BWET) experienced a decrease.

Summary

• Amplify Commodity Trust, a Delaware statutory trust, released its annual report for the fiscal year ended June 30, 2024.
• The trust includes two series: the Breakwave Dry Bulk Shipping ETF (BDRY) and the Breakwave Tanker Shipping ETF (BWET).
• BDRY's share price increased by 120.54% from $5.55 to $12.24, and its net asset value per share increased by 119.75% from $5.52 to $12.13.
• BDRY experienced a net income of $46,770,200, driven by net realized losses on investments and futures contracts of $34,476,191, net unrealized losses of $12,895,930, and a net investment loss of $601,921.
• BWET's share price decreased by 19.59% from $20.88 to $16.79, and its net asset value per share decreased by 19.88% from $20.83 to $16.69.
• BWET reported a net loss of $318,928, resulting from net realized losses on investments and futures contracts of $827,253, net unrealized gains of $941,167, and a net investment loss of $205,014.
• Both BDRY and BWET have expense caps of 3.50% of average daily net assets, excluding brokerage commissions, interest, and extraordinary expenses, through December 31, 2024.
• The Sponsor, Amplify Investments LLC, manages both funds and has agreed to cover expenses exceeding the cap.
• The report details the investment strategies, trading policies, and service providers for both funds.

Sentiment

Score: 6

Explanation: The sentiment is mixed, with strong positive results for BDRY offset by negative results for BWET. The report is detailed and transparent, but the overall outlook is uncertain due to market volatility and geopolitical risks.

Positives

• BDRY experienced significant growth in both share price and net asset value.
• BDRY generated a substantial net income for the fiscal year.
• The expense cap and sponsor's agreement to cover excess expenses provide cost control for both funds.
• The report provides detailed information on the funds' operations and strategies.

Negatives

• BWET experienced a decrease in both share price and net asset value.
• BWET reported a net loss for the fiscal year.
• Both funds are subject to market risks associated with freight futures contracts.
• The funds' performance is subject to the volatility of the shipping industry.

Risks

• The funds are exposed to market risk due to fluctuations in freight futures prices.
• Geopolitical events, such as the Russia-Ukraine war and the Israel-Hamas conflict, can significantly impact shipping rates and commodity prices.
• Changes in Chinese economic policies and demand can affect tanker and dry bulk shipping rates.
• The funds may face liquidity risks if they cannot liquidate positions quickly or at desired prices.
• Natural disasters and epidemics can disrupt markets and supply chains, impacting the funds' performance.

Future Outlook

The report notes that the expense caps for both funds are in place through December 31, 2024, and that the Sponsor and Breakwave have contractual agreements to waive fees and assume expenses to maintain these caps. The report also mentions that OPEC+ intends to gradually increase oil production starting in the fall of 2024, which could increase demand for crude tankers.

Management Comments

• Management of the Sponsor, including Christian Magoon, Principal Executive Officer of the Sponsor, and Bradley H. Bailey, Principal Financial Officer of the Sponsor, assessed the effectiveness of each of the internal control over financial reporting for each of the Trust, BRDY and BWET as of June 30, 2024.
• Based on the assessment, Management believes that, as of June 30, 2024, the internal control over financial reporting is effective for the Trust and each of BRDY and BWET.

Industry Context

The report highlights the impact of geopolitical events, such as the Russia-Ukraine war and the Israel-Hamas conflict, on global shipping and commodity prices. It also notes the influence of Chinese economic activity on tanker demand. These factors are crucial for understanding the performance of the funds, as they directly affect the freight rates and futures contracts that the funds invest in.

Comparison to Industry Standards

• The report does not provide specific comparisons to industry benchmarks or competitors.
• However, the performance of BDRY and BWET can be compared to other shipping ETFs and commodity-focused investment vehicles.
• BDRY's significant gains in share price and NAV suggest strong performance relative to dry bulk shipping market conditions during the period.
• BWET's losses indicate a challenging period for the crude oil tanker market, which may be reflected in the performance of similar funds.
• The expense ratios of 4.31% for BDRY and 16.07% for BWET are relatively high compared to broader market ETFs, but are typical for specialized commodity funds.

Management Changes

Related Party Transactions

• The Sponsor receives management fees from the Funds.
• The Sponsor provides Principal Financial Officer, Chief Compliance Officer, Regulatory Reporting and Wholesale Support services to the Funds.
• The Distributor provides Distribution services to the Funds.

Stakeholder Impact

• Shareholders of BDRY experienced significant gains in their investment.
• Shareholders of BWET experienced losses in their investment.
• The funds' performance is subject to market risks, which can impact shareholder returns.
• The expense caps and sponsor's agreement to cover excess expenses provide cost control for shareholders.

Next Steps

• The Sponsor will continue to manage the funds and monitor market conditions.
• The Sponsor and Breakwave will continue to waive fees and assume expenses to maintain the expense caps through December 31, 2024.
• The funds will continue to trade freight futures contracts to achieve their investment objectives.
• The funds will continue to provide monthly, quarterly, and annual reports to shareholders.

Key Dates

Keywords

Dry Bulk Shipping, Tanker Shipping, Freight Futures, Commodity ETF, BDRY, BWET, Shipping Rates, Amplify Commodity Trust, Financial Report, Commodity Pool