The global tanker market has become increasingly sensitive to changes in oil-trade routes, geopolitical disruptions and vessel availability, creating a distinct investment segment beyond crude prices themselves. The Breakwave Tanker Shipping ETF (BWET) is designed to capture these dynamics through futures linked to crude-oil transportation rates, giving investors exposure to shipping economics rather than direct ownership of energy companies or physical oil.

A Direct Link to Tanker Freight Markets

BWET tracks a portfolio of exchange-cleared crude-oil tanker freight futures based primarily on two Baltic Exchange benchmarks. The portfolio maintains a 90% allocation to TD3C futures, representing VLCC shipments from the Persian Gulf to China, and 10% to TD20 futures, representing Suezmax shipments from West Africa to Europe. The fund typically holds futures with an average maturity of roughly 50 to 70 days and progressively rolls positions into the next calendar quarter.

This structure makes BWET fundamentally different from broad energy ETFs. Its performance depends on expectations for tanker charter rates, which are influenced by vessel supply, global oil demand, trade distances, port activity and disruptions to established shipping routes.

Strong Performance as Tanker Rates Accelerated

BWET recorded a substantial improvement during the second half of 2025. Its NAV increased 81.25% between June 30 and December 31, 2025, rising from $10.63 to $19.27 per share. Over the same six-month period, the market price increased 80.97%, from $10.64 to $19.26.

The acceleration was closely linked to tanker-market conditions. During the three months ended December 2025, average VLCC spot rates increased by about 60%, reaching their highest level in at least five years according to the fund’s filings. Strong seasonal demand and geopolitical disruptions contributed to higher freight rates and wider price ranges in both spot and futures markets.

Geopolitics and the Cost of Rolling Futures

For BWET, geopolitical developments can affect performance through changes in shipping routes and the availability of vessels. Disruptions involving major oil-producing regions can increase voyage distances, tighten effective tanker supply and raise freight rates, although the same events can also introduce substantial volatility.

The futures structure adds another layer of risk. BWET must periodically replace expiring contracts, meaning performance can be affected by whether the freight-futures curve is in contango or backwardation. Contango can create negative roll costs even when underlying tanker rates remain relatively stable. The fund also has a contractual total-expense cap of 3.50% through December 31, 2026, while brokerage and certain other costs can remain outside that cap.

Going forward, investors will be watching VLCC and Suezmax rates, global oil-trade patterns, fleet availability and geopolitical disruptions across major shipping corridors. The relationship between spot tanker rates and forward freight pricing will also be important, particularly because BWET offers concentrated exposure to a specialized and inherently volatile segment of the global commodities market.