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2 ETFs To Profit From Supply Chain Uncertainties

Published 2022-01-28, 04:18 a/m
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Supply-chain issues dominated headlines in 2021. Since the early days of COVID-19, we have seen a ripple effect across global supply chains, restricting international trade flows.

Bottlenecks ultimately have led to inventory shortages and increased costs to procure goods. Despite signs of modest improvements, logistics disruptions continue to impact businesses and consumers worldwide.

Today’s article introduces two exchange-traded funds (ETFs) that could allow investors to profit from uncertainties across global supply chains.

1. SonicShares Global Shipping ETF

  • Current Price: $28.62
  • 52-week Range: $24.49 - $31.63
  • Dividend Yield: 4.98%
  • Expense Ratio: 0.69% per year

According to the Organization for Economic Co-operation and Development (OECD), roughly 90% of the global trade is carried by sea. Our first fund, the SonicShares Global Shipping ETF (NYSE:BOAT), offers pure-play exposure to the international maritime shipping industry and companies that transport goods and raw materials over the waves.

BOAT Daily

BOAT, which currently has 50 holdings, tracks the Solactive Global Shipping Index. The fund was first listed in August 2021, and net assets stand at $12.76 million. In other words, it is a new and small fund.

Sub-sectors include Container Deep Sea and Offshore Shipping (63.6%), Dry Bulk Deep Sea and Offshore Shipping (15.0%), and Crude Oil Transportation (8.4%). Meanwhile, the top ten names account for more than half of the portfolio.

Companies in the fund mainly come from the US, Europe, Japan, and Hong Kong. Among the leading stocks on the roster are the Hong Kong-based Orient Overseas International (OTC:OROVY), Danish A.P. Moller-Maersk (OTC:AMKBY), Japanese Mitsui O.S.K. Lines (T:9104), Germany-based Hapag-Lloyd (F:HLAG), and Israel-based ZIM Integrated Shipping Services (NYSE:ZIM).

Since its inception, BOAT has gained about 15.5% and hit a record high in September 2021. But it lost 3.9% year-to-date.

Given our dependence on global trade, just-in-time manufacturing, and inventory management, BOAT is a bullish bet not only on shipping company shares but also on the projected growth of the global economy. Interested readers could consider buying around these levels.

2. The 3D Printing ETF

  • Current Price: $28.33
  • 52-week Range: $28.03 - $50.37
  • Expense Ratio: 0.66% per year

Our next fund is an ETF managed by Ark Invest founder Cathie Wood. We recently covered the ARK Innovation ETF (NYSE:ARKK) as well as the Tuttle Capital Short Innovation ETF (NASDAQ:SARK), which aims to achieve the inverse (or -1X) of the daily returns of ARKK.

Several ARK funds have come under pressure in recent months. However, The 3D Printing ETF (NYSE:PRNT) could appeal to investors who believe that 3D printing has a role to play in resolving supply chain issues, not only now but also in the future.

PRNT Weekly Chart

The Chartered Institute of Procurement & Supply (CIPS) suggests:

“The 3D printer could be set to revolutionize future supply chains by reducing supply complexities, increasing the speed to market of products, reducing global impact by limiting the shipping of goods around the globe, whilst enabling the printing of replacement parts in remote locations.”

PRNT provides exposure to 3D printing-related businesses, such as 3D printing hardware and printing materials, computer-aided design (CAD) software, and 3D printing centers.

The fund, which started trading in July 2016, has 54 holdings. The top ten names account for more than a third of the portfolio. Net assets currently stand at $394.4 million.

Among the leading stocks, we see the imaging and printing products provider HP (NYSE:HPQ), technology giant Microsoft (NASDAQ:MSFT), software services providers Dassault Systemes (OTC:DASTY), and software group PTC (NASDAQ:PTC).

PRNT hit a record high in February 2021. Since then, the trend has been down, and the fund has declined 29.9% over the past year. And so far in January, it has lost around 17.9%, currently hovering at its 52-week low price. Long-term investors could regard this significant drop as a good entry point into the fund.

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