Investing in Blockchain ETFs

- July 22nd, 2019

Investing in the blockchain industry is a relatively new phenomenon. Here’s a look at how to get started on investing in blockchain ETFs.

Cryptocurrency investors have experienced a real rollercoaster in the last year or so.

The likes of bitcoin, ethereum and ripple have all reached incredible highs and then crashed, and investors have seen big gains and big losses (and then gains again). The cryptocurrency space remains volatile but exciting, and many are interested in how to enter and make money in this developing sector.

However, depending on how you look at it, perhaps an even bigger story is blockchain, the technology behind cryptocurrencies. Blockchain is the mechanism by which digital currencies are “mined” into existence, and it has become a popular investment in its own right for savvy investors.

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Case in point — a range of blockchain technology stocks have emerged, creating a wider array of blockchain companies in the market. Large companies like Facebook (NASDAQ:FB), IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT) and Toyota (NYSE:TM) have invested in blockchain. These corporations see the potential for blockchain to play a role in driverless vehicles, food safety and fintech.

For those newer to the blockchain investment space, deciding on a specific company to invest in may seem overwhelming, especially with the current uncertainty and price movements in the market.

That’s where exchange-traded funds (ETFs) come in. In simple terms, ETFs are marketable securities that track an index, a commodity, bonds or a basket of assets like an index fund. ETFs trade like a stock, and each ETF owns its underlying assets, dividing them up into shares that are available to investors.

While blockchain investing is new compared to most other industries, more and more investment data and opportunities are opening up in this space. Below we run through the top five blockchain ETFs by total assets, as per information on ETF.com.

Bear in mind that none of these ETFs are pure-play blockchain funds — all of them have other technology holdings and are not solely focused on blockchain companies.

1. Amplify Transformational Data Sharing ETF (ARCA:BLOK)

Net assets: US$110.45 million

First on our list of blockchain ETFs is the Amplify Transformational Data Sharing ETF. It launched in January 2018 and has had its share of ups and downs.

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This fund has exposure to investing in blockchain through a blend of industries, including banks, computers, telecommunications and media. It invests in various levels of blockchain companies such as those whose operations are directly involved in blockchain applications, companies that have investments in blockchain technology and companies that are part of a blockchain consortium committed to the technology’s advancement.

Amplify is an actively managed blockchain ETF, which makes it stand out against the other ETFs on this list. It has 55 holdings with an expense ratio of 0.9 percent. The ETF’s top holdings include Overstock (NASDAQ:OSTK), Digital Garage (TSE:4819) and GMO Internet (TSE:9449).

2. Reality Shares NASDAQ NexGen Economy ETF (NASDAQ:BLCN)

Net assets: US$71.22 million

The Reality Shares NASDAQ NexGen Economy ETF launched in January 2018. The ETF’s holdings are principally focused on companies that are involved in the research, development and application of blockchain technology.

This blockchain ETF has 64 holdings with an expense ratio of 0.68 percent. Advanced Micro Devices (NASDAQ:AMD), Digital Garage and Accenture (NYSE:ACN) are among its top holdings. Its assets under management now stand at US$71.22 million.

3. First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR)

Net assets: US$42.91 million

The First Trust Indxx Innovative Transaction & Process ETF also launched in January 2018; it is a passive index fund. First Trust made this choice because it does not believe that anyone is currently adequately qualified to lead in the blockchain space given that it is such a new industry.

First Trust has two types of companies it selects from: blockchain users and blockchain developers. These include companies like IBM and Microsoft.

The fund consists of 101 holdings, which include Advanced Micro Devices, Wirecard (FWB:WDI) and Microsoft. It has an expense ratio of 0.65 percent.

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4. Innovation Shares NextGen Protocol ETF (ARCA:KOIN)

Net assets: US$10.5 million

Fourth on our list of blockchain ETFs is the Innovation Shares NextGen Protocol ETF. It is yet another blockchain ETF that launched in January 2018. This blockchain ETF is an index that selects its holdings based on their suitability in four categories: mining enablers, cryptocurrency users, solution providers and cryptocurrency payees.

In total, the fund has 48 holdings and its expense ratio is 0.95 percent. Its top three holdings are Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Intel (NASDAQ:INTC) and Visa (NYSE:V).

5. Goldman Sachs Motif Finance Reimagined ETF (ARCA:GFIN)

Net assets: US$9.98 million

Our final blockchain ETF is Goldman Sachs’ (NYSE:GS) Motif Finance Reimagined ETF. Listed in March 2019, this ETF tracks the Motif Finance Reimagined Index, which provides exposure to companies that are investing in technological innovations and advancements.

The majority of its holdings fall into the “digitization of finance” segment, while just over 15 percent of its holdings are focused on the blockchain industry. The ETF’s top three holdings are Mastercard (NYSE:MA), Visa and Square (NYSE:SQ).

This ETF has 121 holdings with an expense ratio of 0.5 percent.

This is an updated version of an article first published by the Investing News Network in 2017.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article. 

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