Reality Shares’ China Blockchain ETF Officially Launches

Reality Shares has officially launched its Reality Shares NASDAQ NexGen Economy China ETF (NASDAQ:BCNA), the company announced on Wednesday (June 20).

BCNA is the first-ever China-based blockchain ETF, and is comprised of 31 blockchain-related companies in Hong Kong and mainland China.

The ETF intends to measure returns of companies in China that are “committing material resources to developing, researching, supporting innovating or utilizing blockchain technology for their use or for use by others,” as per a company press release.

“China’s blockchain industry presents an incredibly exciting and long-term investment opportunity,” Eric Ervin, CEO of Reality Shares, said in the release.

Ervin told the Investing News Network (INN) in a telephone interview that BCNA is being looked at as a “unique pure-play” ETF because US-based investors can’t otherwise get exposure to China directly. He also said the country is an underinvested market as a whole.

“China has made blockchain their thing,” Ervin said, explaining that there are almost three times as many blockchain-related patents filed in China than anywhere else in the world. “[Investors can] get access to this great emerging market [through BCNA] but … also get access to the most innovative companies in the most innovative sector of the economy, and it’s a powerful combination.”

In fact, Cointelegraph reported in March of this year that out of the 406 global blockchain patents filed in 2017, China led with 225, followed by 91 from the US and 13 from Australia.

BCNA’s holdings are determined by Reality Shares’ blockchain score methodology, which evaluates companies on key factors, such as: role in the blockchain ecosystem; blockchain production stage; blockchain economic impact; Blockchain Institute membership; research and development expenditure; and company filings and innovation.

“These are companies that are using [blockchain] technology in their businesses,” Ervin told INN, stating that these companies are also doing “other things” with their businesses in addition to blockchain. “These are the kind of ones you want to be investing in, these are the ones that are more innovative, more healthy and embracing change.”

When asked about the benefits of investing in a blockchain ETF over a single company, Ervin said that ETFs offer exposure to all the companies that are participating in blockchain, making it a profitable way to “capture an innovation.”

“You want to own a diversified portfolio because you don’t know which one’s going to be the winner,” he said. “The only way to get [a diversified portfolio] is to get it through something like an ETF instead of trying to do your own research and pick your own stocks.”

BCNA will rebalance semiannually, and out of its 31 holdings, the following are the top five weighted companies on the index: Alibaba Group Holding (NYSE:BABA) with a 3.58-percent weighting; Hundsun Technologies (SHA:600570), which is weighted at 3.43 percent; Baidu (NASDAQ:BIDU), representing a 3.39-percent weighting; DHC Software (SZSE:002065), which holds a 3.34-percent weighting; and Jiangsu Zhongnan Construction (SZSE:000961), which also has a 3.34-percent weighting.

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Securities Disclosure: I, Jocelyn Aspa, 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.