Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

2 Niche ETFs To Provide Asset Diversity, Increased Stability To Any Portfolio

By Investing.com (Tezcan Gecgil/Investing.com )ETFsMar 31, 2021 04:35AM ET
www.investing.com/analysis/2-niche-etfs-to-provide-asset-diversity-increased-stability-to-any-portfolio-200570438
2 Niche ETFs To Provide Asset Diversity, Increased Stability To Any Portfolio
By Investing.com (Tezcan Gecgil/Investing.com )   |  Mar 31, 2021 04:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Financial planners and academic research typically concur that diversification, a fundamental concept in investing, can decrease a portfolio's volatility without reducing expected returns. For most retail investors, diversification means "not putting all of your eggs in one basket."

In this column, we regularly introduce different exchange-traded funds (ETFs) that might help readers diversify. Today, we discuss two niche funds.

1. Breakwave Dry Bulk Shipping ETF

Current Price: $16.50
52-Week Range: $3.75 - $20.84
Expense Ratio: 3.32% per year

The Breakwave Dry Bulk Shipping ETF (NYSE:BDRY) is currently the only freight futures ETF focusing on dry bulk shipping. It invests in a portfolio of near-dated freight futures contracts on dry bulk indices. These futures typically have a weighted average of approximately three months to expiration.

In dry bulk shipping, these size of ships are currently the most widely used:

Capesize: ~180,000 tons (largest dry bulk ship; mainly used for long-haul, iron ore)

Panamax: ~75,000 tons (regarded as the workhorse” of the industry; mainly used for coal and grains; can use Panama Canal)

Supramax: ~55,000 tons (most versatile due to ability to access small ports)

The initial freight futures allocation was 50% Capesize contracts, 40% Panamax contracts and 10% Supramax contracts. The fund rebalances annually in early December. BDRY started trading in March 2018, and assets under management stand at $50.4 million.

BDRY Weekly
BDRY Weekly

Shipping is an important segment of the transportation sector, where rates are based on supply and demand. Commodity trading relies heavily on shipping. Crude oil, iron ore and coal top the list of commodities shipped globally. On the demand side, China is the most important market for seaborne volumes.

In recent days, shipping rates surged as a 400-metre-long ship got stranded in the Suez Canal through which more than 10% of daily global trade passes. News headlines noted:

“The 200,000-tonne ship operated by Taiwanese company Evergreen Marine is one of the world’s biggest container vessels with a length of four football pitches and can carry around 20,000 containers.”

With it, hundreds of ships also got "stuck in a tailback waiting to pass through the 193-kilometre (120-mile) canal on either side of the blockage."

Such disruptions, which affect the supply chain, push shipping rates higher. As a result, in the past several days, BDRY has also gone up more than 10%. Over the past year, the fund has returned about 240%, hitting a 52-week high in recent days.

The Suez Canal incident of the past few days was an extreme event that is currently being resolved. Therefore, there could soon be some profit-taking in BDRY. We should also remind readers that this is a small and niche ETF with a high expense ratio. Yet, those investors who believe fundamentals for dry bulk shipping will be favorable in the rest of the year could consider a small exposure to the fund.

2. Emles Luxury Goods ETF

Current Price: $28.21
52-Week Range: $24.92 - $29.05
Expense Ratio: 0.60% per year

The Emles Luxury Goods ETF (NYSE:LUXE) invests in global businesses likely to benefit from sales and consumption of luxury goods. The fund started trading in November 2020, and assets under management are $2.8 million.

LUXE Weekly
LUXE Weekly

The global luxury market is "projected to grow from US$257.26 billion in 2020 to US$352.84 billion in 2027 at a CAGR of 4.6% in the 2020-2027 period."

Research suggests two segments of consumers are also catching the attention of companies that offer luxury goods and services. They include "High-Earners-Not–Rich-Yet (HENRY)... [and] the younger section of the population, who comprise the future consumers of luxury goods."

Therefore, companies are likely to increasingly offer products and services that could command a premium price among a larger consumer base.

LUXE, which has 47 holdings, tracks the Emles Global Luxury 50 Index. Among the leading names are Volkswagen (OTC:VWAGY), Daimler (OTC:DDAIF), Apple (NASDAQ:AAPL), Diageo (NYSE:DEO) and Estee Lauder (NYSE:EL).

So far in 2021, the fund is up about 3.5%. Those investors who want exposure to this niche market segment could keep the fund on their radar.

2 Niche ETFs To Provide Asset Diversity, Increased Stability To Any Portfolio
 

Related Articles

2 Niche ETFs To Provide Asset Diversity, Increased Stability To Any Portfolio

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Jokers R Us
Jokers R Us Mar 31, 2021 4:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Trash
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email