ETF Focused on Oil Shipments Sets Sail

An exchange-traded fund with investments tied to oil tanker shipments launched into choppy seas this week, as the price of crude has dropped and concerns linger about global economic growth eating into demand. 

The Breakwave Tanker Shipping ETF (BWET) began trading May 3 and has declined 12% to $12.50 as of Friday afternoon. The ETF was launched by Breakwave Advisors and ETF Managers Group, both based in Summit, New Jersey.  

The issuers, who say this fund is the first of its kind to offer “long exposure to the crude oil tanker shipping market,” also see investor appetite in all stages of the oil shipping sector. 

"There is an under-investment in shipping capacity and crude oil tankers represent nearly one-third of the global shipping transportation capacity,” Matthew Bromberg, chief operating officer of ETF Managers Group, said in a statement. “We’ve seen that investors are seeking exposure to the supply chain.” 

Crude prices have sunk 36% over the past year on concerns that the world’s two largest economies—the U.S. and China—will slow consumption. At the same time, global oil usage is expected to grow in the coming years, despite expanding use of renewable energy. 

Still, the fund issuers see a bright future for the shippers. Founder John Kartsonas said in a statement that “major geopolitical changes affecting the oil markets” are helping the tanker business. 

“The tanker industry is faced with high demand for oil transportation, a limited vessel order book, disruptions in the traditional shipping routes, and longer shipping distances,” he said. 

The fund will invest in futures contracts, using a so-called laddered strategy: It will buy contracts while letting existing positions expire and settle in cash. 

Breakwave’s other fund is the $77.5 million Breakwave Dry Bulk Shipping ETF (BDRY). That fund, launched in 2018, has declined 19% over the past five years, according to etf.com data. Still, it’s pulled in $30.9 million in assets so far this year.  

Contact Ron Day at [email protected] or follow him on Twitter at @RonDayETF