The Direxion Auspice Broad Commodity Strategy ETF (NYSE:COM), began trading yesterday on the NYSE Arca exchange, and tracks the Auspice Broad Commodity Index. That index uses a rules-based approach to capture trends in 12 diversified commodity markets using proprietary quantitative methodology.
Direxion described the new fund via press release:
COM allows investors to take advantage of rising commodity prices, in addition to mitigate risk by going flat (cash) when individual commodities are experiencing downward trends. It seeks to potentially provide commodity investment returns with lower risk characteristics than long-only commodity strategies. The fund seeks to provide total return that exceeds that of the Auspice Broad Commodity Index over a complete market cycle and is potentially more adaptive to volatile commodity markets because it seeks commodity returns by taking advantage of individual commodity prices when they rise, and preserving capital by going to cash when prices fall.
The issuer also made some interesting commentary on the commodities markets and the unique new product’s advantages:
“Commodities markets are cyclical and tend to revert to the mean. Traditional funds have long-only exposure to commodities, which limits their potential because investors can only benefit when commodity prices rise,” said Edward Egilinsky, Managing Director at Direxion. “Successfully investing in commodities depends on the ability to adapt to change. COM uses a long/flat (cash) approach to take advantage of rising commodity prices, in addition to mitigating risk when individual commodities are in downward trends. That makes it uniquely adaptive to volatile commodities markets. Its 40-Act structure means there’s no K-1 tax reporting.”
We’ll be sure to check back in with COM and issue ratings once it gets some trading time under its belt. For now, you can check its official page for more information.