According to Tor Svelland, founder of Svelland Capital Ltd., a shipping hedge fund, the shipping industry is poised for another strong year due to the reopening of China’s economy and a lack of fleet expansion. Svelland predicts that the transportation capacity of the merchant fleet will not meet demand, leading to high freight rates, particularly for carriers that ferry commodities such as grain and iron. Oil and fuel tankers are also expected to have longer journeys due to the European Union’s ban on seaborne purchases from Russia, which could reduce the availability of ships. Despite a record year in 2021, Svelland remains bullish on the shipping industry and expects freight rates to climb even higher this year, driven mainly by oil tankers, dry cargo, and LNG.
Here are some ETFs that have exposure to the shipping industry.
Breakwave Dry Bulk Shipping ETF (BDRY):
Strategy: BDRY is an actively managed ETF that seeks to provide exposure to the dry bulk shipping market through a futures-based strategy. The ETF invests primarily in futures contracts on dry bulk indices, with the goal of capturing fluctuations in shipping rates.
Management fee: 3.29%
Note: The Management Fee here is huge, but this fund delivered a 30% return in March of 2023.
SonicShares Global Shipping ETF (BOAT):
Strategy: BOAT tracks the performance of the Bloomberg Global Shipping Index, which includes companies involved in the shipping and logistics industries, such as container shipping, dry bulk shipping, and oil tanker shipping.
Top holdings:
Hapag-Lloyd AG 6.68%
Kawasaki Kisen Kaisha, Ltd. 5.85%
A.P. Moller – Maersk 4.92%
Mitsui O.S.K.Lines,Ltd. 4.90%
Orient Overseas (International) 4.82%
Management fee: 0.65%
U.S. Global Sea to Sky Cargo ETF (SEA):
Strategy: SEA tracks the performance of the U.S. Global Sea to Sky Index, which includes companies involved in the transportation and logistics of goods and people, including airlines, trucking companies, and shipping companies.
Top holdings:
Orient Overseas (International) 5.50%
Zim Integrated Shipping 5.36%
Cosco Shipping Hld 5.22%
Evergreen Marine 4.91%
A.P. Moller – Maersk 4.90%