INN spoke with a product manager at ETF provider VanEck about the progress of a crypto fund that’s based not on a coin, but on companies.
Investment in digital currencies continues to grow aggressively, with interest becoming more widespread and potential returns increasing.
This year has been marked by more diverse approaches to digital currency exposure, and one exchange-traded fund (ETF) firm is now offering investors a different route into the market.
While investment in currencies such as bitcoin and ethereum has traditionally been known for its do-it-yourself style, which rewards studious and dedicated buyers, in 2021 there has been a rise in ETFs that track and offer exposure to the top digital currencies.
Following on from this trend, the team at ETF provider VanEck launched the VanEck Vectors Digital Transformation ETF (NASDAQ:DAPP) in April. It is dedicated not to following the price of a specific coin, but instead to tracking publicly traded companies related to the digital currency market.
The Investing News Network (INN) recently caught up with John Patrick Lee, product manager at VanEck, to discuss the fund’s results so far and why VanEck thought it would be beneficial to pursue the digital currency market through this lens.
“We try to design forward-looking, intelligently designed strategies that provide access to opportunities that you might not be getting in your normal investments,” Lee said.
The fund offers investors an avenue into what Lee described as the “digital transformation economy.”
The investment expert described the level of interest in digital currencies as rapidly increasing across the board, from retail investors to institutions themselves.
“These companies that are participating are primed for a long-term growth environment where they’re disrupting traditional industries,” the VanEck representative said.
Lee expressed enthusiasm for the road ahead in the cryptocurrency space and for the companies working around this segment. However, he reminded investors that these are very early days, and the potential displayed by the players in this industry may not be immediate.
According to Lee, bitcoin’s correlation to the basket of companies in the VanEck fund isn’t one-to-one, since these companies can have diversified operations. This means the value of the fund doesn’t move alongside the price of bitcoin.
“For this industry, you know, we’re strong believers and think that there’s a lot of growth potential. We’re looking for (growth) over the broad market,” said Lee. “That’s what we want to see.”
When it comes to investments in digital currencies and volatility, the two are inseparable. Lee told INN investors need to be ready and should expect volatility when it comes to these types of investments. This may only change with increased adoption and normalization.
Lee said tracking the day-to-day of the cryptocurrency market has brought back an exciting aspect for investments. “Early stages is exciting to be a part of and a lot of fun to watch,” he said.
Some of the top holdings for the fund based on percentage of net assets are:
- Square (NYSE:SQ)
- Coinbase Global (NASDAQ:COIN)
- Marathon Digital Holdings (NASDAQ:MARA)
- Microstrategy (NASDAQ:MSTR)
- Riot Blockchain (NASDAQ:RIOT)
“These are early stage companies, these are new companies that are operating within a long-term structural growth story,” Lee told INN.
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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.