Interested in blockchain ETFs? In this guide, you will find an in-depth review of the top five best blockchain ETFs that you can add to your portfolio to gain investment exposure to this innovative new technology.
What is an ETF?
An exchange-traded fund (ETF) is a type of investment fund that tracks a collection of assets, such as equities, commodities, derivatives, bonds or an index.
The underlying assets can be merged either physically or synthetically into an ETF wrapper, which allows investors to purchase shares in the ETF on stock exchanges to gain exposure to these assets.
ETFs have become popular investment vehicles as they provide both retail and institutional investors with exposure to a wide range of asset classes that would otherwise be difficult to invest in. Moreover, unlike mutual funds, most ETFs are structured in a tax-friendly way and offer relatively low fees.
What Are Blockchain ETFs?
Blockchain ETFs are exchange-traded funds that provide investors with exposure to publicly-traded companies that are involved in developing and/or utilising blockchain technologies. While the market is still waiting for a Bitcoin ETF, blockchain ETFs have gained popularity over the course of the 18 months during which half a dozen blockchain ETFs have been launched.
Below, you will discover a list of the five best blockchain ETFs to watch in 2019.
Top 5 Best Blockchain ETFs
Reality Shares Nasdaq NexGen Economy ETF (BLCN) is a passively managed fund that tracks companies that research, develop and utilise blockchain technology.
The blockchain ETF is backed by Nasdaq and Reality Shares and is recognised as one of the most stable blockchain ETFs since 80 percent of its holdings consist of large-cap stocks. Launched in January 2018, the BLCN lists over 60 stocks and has an average trading volume of 13,400. The total net assets under management are over $74 million.
One of the main ways BCLN uses to evaluate a potential company is the number of material resources that are invested in researching and developing blockchain technology. Holdings include an up to 50 percent concentration in IT and investments in corporations such as Microsoft, Intel, Alibaba, and more.
BLCN summary data includes:
- AUM: $74,740,442
- Expense Ratio (%): 0.68
- NAV: $21.05
- Holdings: 60
The First Trust Indxx Innovative Transaction and Process ETF (LEGR) invests in companies that are involved in or are developing decentralised technologies.
LEGR was launched in 2018 and is traded on the Nasdaq exchange. The fund has 99 holdings of which over 80 percent of its assets are in technology and traditional finance sectors.
LEGR classifies companies into three types of blockchain investments. They include:
- Active enablers – These are firms that develop blockchain technology and products for internal use or for sale.
- Active users – These are firms that deploy blockchain technology that is generally supported by an active enabler or has at least one use case involving blockchain technology.
- Active Explorers – These are firms that have announced their intentions to research blockchain technology and integrate it into their business model.
LEGR invests equally among firms considered as active enablers and active users. This diverse approach to investment makes the ETF attractive to many investors. The fund has invested in companies such as Microsoft, Oracle, and PayPal and rebalances its holdings twice a year.
LEGR summary data includes:
- AUM: $39,765,705
- Expense Ratio (%): 0.65
- NAV: $27.42
- Holdings: 99
The Amplify Transformational Data Sharing ETF (BLOK) is an actively managed ETF that invests over three-quarters of its net assets in global equities linked to blockchain and crypto-assets.
Launched in January 2018 by Amplify, the fund boasts one of the highest AUM among the blockchain ETFs at $108 million. The majority of these assets are investments in firms dealing in “transformational data sharing technologies.” The fund is mainly traded on the NYSE Arca exchange.
BLOK has a total of 55 holdings spread across mostly North American and Asian markets. Most companies in the fund are located in the U.S and Japan. In addition, the fund has high performing investments in companies such as GMO Internet, Square, and Goldman Sachs.
BLOK summary data includes:
- AUM: $107,980,311
- Expense Ratio (%): 0.70
- NAV: $16.49
- Holdings: 55
The Innovation Shares NexGen Protocol ETF (KOIN) is a fund that utilises artificial intelligence (AI) technology to choose the blockchain firms in which it invests. Founded in January 2018, the fund is traded on the NYSE and has a total of 47 holdings.
The fund’s AI uses a proprietary algorithm to glean data on online media sites and databases specifically targeting stocks with related keywords. The companies which KOIN invests in are classified according to four categories each of which have a maximum of 15 companies. The categories comprise of cryptocurrency users, mining enablers, solution providers, and cryptocurrency payees.
Currently, KOIN has $10 million of assets under management. The fund’s holdings are weighted by market capitalisation with no firm exceeding 40 percent and individual companies are capped at 7 percent. Some of the holdings include Amazon, Intel, and Mastercard.
KOIN summary data includes:
- AUM: $10,019,054.53
- Expense Ratio (%): 0.95
- NAV: $23.57
- Holdings: 47
Reality Shares Nasdaq NexGen Economy China ETF (BNCA) tracks the returns of Chinese companies that are committing material resources to research, develop and utilise blockchain technology for a variety of use cases. Founded in 2018, the ETF has a total of 40 holdings.
BCNA has close to $2 million of assets under management with over 50 percent of the holdings being in the IT and finance sectors. The ETF has holdings in companies such as Hundsun Technologies, YGSOFT, and Alibaba.
BCNA summary data includes:
- AUM: $1,997,300.89
- Expense Ratio (%): 0.78
- NAV: $0.25
- Holdings: 40
If you would like to add more cryptocurrency and blockchain exposure to your equity portfolio, check out our guide to the best bitcoin stocks that you can purchase in 2019.