Canadian ETF Maker Bets Heavily on Crypto with Third Fund

Evolve Funds Group is going all in on cryptocurrency assets with the launch of a brand-new exchange-traded fund (ETF) designed to fill market demand.

On Wednesday (September 29), the Canadian fund maker will officially launch the Evolve Cryptocurrencies ETF (TSX:ETC). The new offering will combine the firm’s two other crypto funds, which are focused on bitcoin and ethereum.

Elliot Johnson, chief investment officer and chief operating officer with Evolve ETFs, told the Investing News Network (INN) that the reason for debuting this fund goes back to conversations with investors and partners about what was missing from their cryptocurrency investments.

Johnson explained that many investors want the ability to invest in one fund alone that will give them direct exposure to both bitcoin and ethereum.

“This is really about providing a service to clients, people who want to buy one (fund) and then not worry about it and not worry about owning the wrong thing at the wrong time,” Johnson said.

The executive said Evolve ETFs began thinking about this new fund shortly after launching its second crypto fund, the Ether ETF (TSX:ETHR), back in April. The first first crypto fund from the firm was the the Evolve Bitcoin ETF (TSX:EBIT), which made its trading debut in February.

“We’ll have (ETC) hold the EBIT and ETHR ETFs’ market cap weight so that investors have the appropriate exposure,” Johnson told INN. “And it turns out if you do that, you end up capturing about 65 (percent) of the cap weight of the entire crypto market just with those two cryptos, because they’re so big.”

The executive said investor demand has been rising since Evolve ETFs launched its first two crypto funds.

He added that the strategy surrounding these funds is also changing. While some investors initially made exploratory purchases with the intention of selling later on, many now have a more measured approach and are specifically looking to fit cryptocurrencies into their portfolios.

In its statement announcing this week’s ETF launch, Raj Lala, president and CEO of Evolve ETFs, said bitcoin’s position as a store of value means it can be compared to gold, whereas ether is like digital oil since it fuels digital assets like non-fungible tokens.

For Johnson, this line of comparison is the most appropriate fit at the moment in terms of breaking down digital coin investments for uninitiated investors. However, he added, no analogy is perfect.

“There’s always more to the story, and depending on how deep down the rabbit hole you go on learning about the technology behind bitcoin and ether — you may have different analogies,” he told INN.

Volatility playing huge role in adoption of digital asset class

When it comes to digital assets, Johnson said he still sees investors mostly obtaining exposure to the space at a measured pace.

“When you’re dealing with a very volatile asset class, even if you have high conviction that it’s going to appreciate over time, you have to size it properly for your portfolio,” he said.

Johnson was clear that cryptocurrencies can be risky, but told INN that the diversification granted by the new fund will bring down the level of volatility for investors looking into the space.

“Some investors right now, they like the volatility, they view that as the cost of opportunity, and I think there’s some truth to that,” Johnson said.

The executive is a firm believer that cryptocurrency investments are here to stay and will only stabilize further as these assets gain wider mainstream appeal.

“To be perfectly honest, I think there are a lot of investors out there who are waiting for volatility to drop before they get in,” he said.

The executive told INN he expects to see more crypto-related funds from Evolve ETFs in the future as the firm works with regulators to obtain approvals.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.