The stock market has rallied relentlessly this year, fueled by a torrent of monetary and fiscal stimulus and strong corporate earnings. Though a broader market sell-off was seen last week on investors’ concerns over the rapid spread of the highly contagious Delta variant of COVID-19, a better-than-expected U.S. retail sales report, boosted by back-to-school shopping and government payments of child tax credits, could ease expectations of a dramatic downturn in economic growth in the third quarter, and push the stock market higher in the coming weeks.

With the inflationary pressure in mind, betting on commodity ETFs could be an ideal strategy for now because they have proven to be resilient amid inflationary pressure and they help diversify investment portfolios. 

So, Breakwave Dry Bulk Shipping ETF (BDRY) and ProShares Ultra Bloomberg Natural Gas (BOIL), which have tripled in value this year, could be solid additions to one’s  watchlist.

Breakwave Dry Bulk Shipping ETF (BDRY)

BDRY is the first exchange-traded fund to offer exposure to freight futures. Dry bulk shipping is an important component  of the global commodities market and is uncorrelated with other major asset classes. By owning near-dated freight futures contracts on three dry bulk indices, BDRY provides  exposure to the charter rate for dry bulk shipping. It has approximately $90.3 million in assets under management (AUM). BDRY’s major holdings include BALTIC Capesize Time Charter and First American Treasury Obligs X (FXFXX).

BDRY has a 3.76% expense ratio, which is higher than the 0.77% category average. The ETF has a stable environmental, social, and governance (ESG) outlook. It has an A MSCI Rating, which is based on a score of 6.1 out of 10. BDRY’s shares have gained 298.1% over the past year and 70.3% over the past three months. In addition, the fund has a 0.52 five-year monthly beta, indicating that it is less volatile than the broader market.

BDRY is currently trading at $30.65, which is 1.1% lower than its 52-week high of $31. The fund has advanced 332.3% over the past nine months and has seen $9.35 million in net inflows during this period.

BDRY’s POWR Ratings reflect this promising outlook. The ETF has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

BDRY has an A grade for Trade and Buy & Hold, and a B grade for Peer. Of the 114 ETFs in the Commodities ETF group, BDRY is ranked #29.

ProShares Ultra Bloomberg Natural Gas (BOIL)

BOIL is a leveraged ETF which, like all geared products, is intended to be held only for short periods. BOIL provides twice  the return of a futures-based natural gas index daily. The fund has approximately $62.3 million in AUM.

BOIL has a 0.95% expense ratio , which is higher than its 0.91% category average. It has gained 147.9% over the past month and 236.5% over the past six months.

BOIL closed yesterday’s trading session at $70.96 and is currently trading just 12.1% below its 52-week high of $80.73. BOIL’s NAV stood at $39.51. Also, the fund has attracted $7.6 million in  net inflows over the past year and is up 83.1% during the same period.

It is no surprise that BOIL has an overall B rating, which translates to Buy in our POWR Ratings system. It also has an A grade for Trade and Peer, and a B grade for Buy & Hold. It is currently ranked #1 of 18 ETFs in the Leveraged Commodities ETFs group.

BDRY shares were trading at $30.64 per share on Friday morning, down $0.01 (-0.03%). Year-to-date, BDRY has gained 297.92%, versus a 19.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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