The recently launched Direxion Breakfast Commodities StrategyETF is a first-of- its kind exchange-traded fundETF that provides exposure to the most important meal of the day, and we all know that breakfast can be the springboard for a successful day.
BRKY tracks the S&P GSCI Dynamic Roll Breakfast OJ 5% Capped Index and includes corn, coffee, lean hogs bacon orange juice concentrate, sugar and wheat.
This basket of commodities may offer investors diversification due to their non-correlated returns in comparison to stocks and bonds during this time of inflation, the company said in a press release.
Why is an ETF a wise investment purchase?
Direxion said that ETFs offer both buy and hold investors and more directional traders a number of structural advantages, as well as a number of structural advantages, according to the managing director and head of product, David Mazza. He said that their ease of trading and tax advantages are particularly helpful for savvy traders who are able to deal with market volatility and even profit in adverse conditions.
What makes this exchange traded fund different from other exchange traded funds?
Mazza said that each of these commodities has relatively inelastic demand qualities and faces tailwinds due to inflation, supply chain pressures and geopolitical tensions.
The decline in tech and stocks in general is leaving investors particularly hungry for commodities, Mazza said.
Mazza stated that the idea for the product came from two areas.
He said commodities have proven attractive to investors who are looking for a hedge against inflation and offer diversification to traditional stock and bond portfolios.
Mazza said that global food prices are at their highest level ever. Breakfast commodities are attractive because of the relatively steady demand of these American staples, but also because we felt that many investors were underexposed to them. Mazza said Direxion was inspired by the fictional characters Mortimer Duke and Randolph Duke who explained commodities to Billy Ray Valentine in the 1983 film Trading Places, starring Dan Aykroyd and Eddie Murphy.
I love the Trading Places movie and BRKY was created to allow traders to directly access breakfast commodities, like the characters in the classic movie, he said.
How are the passive ETFs and how purchasing an ETF is lower risk?
BRKY tracks the S&P GSCI Dynamic Roll Breakfast OJ 5% Capped Index. The index is designed to lessen the impact of near-term price volatility by using a systematic rule-based methodology to search for contract months that have the largest roll yield for each commodity, according to Mazza.
Why is diversification of portfolio important in a bear market?
If you walk through the local supermarket, you will get an indication of how important diversification is. As interest rates rise, he said that the economy cools, and significant geopolitical uncertainty takes a toll on the average American s spending power, causing the prices of everyday commodities to skyrocket.
With prices increasing, investors may want to diversify into these commodities to protect their portfolios against losses in stocks and bonds, Mazza said.