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Direxion Debuts ‘Breakfast Commodities’ ETF

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Remember that classic scene from Trading Places where characters played by Ralph Bellamy and Don Ameche use breakfast foods to teach Eddie Murphy’s character about commodity markets? Well, Direxion has more or less packaged that concept in an exchange-traded fund (minus the plate of gold bars) that launched today.

The Direxion Breakfast Commodities Strategy ETF (BRKY) offers futures-based exposure to the price of corn, coffee, lean hogs, sugar, Chicago wheat and orange juice. The fund comes with an expense ratio of 0.70% and lists on the NYSE Arca.

Like most of the more recently launched commodity futures products, BRKY relies on a ’40 Act fund structure, using a Cayman Islands subsidiary to hold its futures portfolio. That means investors in BRKY will not have to deal with the inconvenience of a K-1 form at tax time.

The fund tracks the performance of the S&P GSCI Dynamic Roll Breakfast (OJ 5% Capped) Index, with weightings determined by global production, although orange juice is limited to a weighting of 5%. The index is not a front-month one; instead, it buys the contract with the largest roll yield, the prospectus says.

The document notes that at inception, corn had a weight in the index of 41.22%, with coffee at 8.06%, lean hogs at 13.2%, sugar at 11.68%, Chicago wheat at 24.52% and orange juice at 1.32%.

The largest agricultural commodities ETF is the $2.4 billion Invesco DB Agriculture Fund (DBA), which does not include orange juice futures in its portfolio, but does include soybeans, cotton, cocoa, live cattle and feeder cattle.

 

Contact Heather Bell at heather.bell@etf.com

 

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