By
Mayowa Adebajo
May 7th, 2024
The new blockchain ETF is looking to provide investors with an exposure to companies operating within the rapidly developing blockchain industry.
The Toronto Stock Exchange (TSX) will now start trading a new blockchain-based exchange traded fund (ETF) on its platform. According to a Bloomberg report on Thursday, the Horizons Blockchain Technology and Hardware Index ETF will join similar ETFs from Harvest Portfolio Group Inc. and Evolve Funds Group Inc.
ETF is an investment fund that tracks an index, a commodity, bonds, or a collection of assets like an index fund. It is similar to a common stock on a stock exchange and goes through price changes during the day as they are bought and sold. Unlike mutual funds, ETFs generally have lower fees and higher liquidity, what makes them an attractive investment tool for traders.
The new ETF will comprise shares of companies focused on the production blockchain-related hardware and services, including Nvidia Corp, Hive Blockchain Technologies Ltd, Digital Realty Trust Inc., and others.
“We don’t know which individual blockchain companies are going to work, we have no idea what the extent of the blockchain applications will be, but we do know people will have to invest in the infrastructure to build out blockchain,” Steve Hawkins, co-CEO of Horizons ETFs Management Canada, said in a phone interview to Bloomberg. “It’s going to be these ancillary services to the blockchain technology where the winners are going to be at the end of the day.”
The ETF will be traded under the ticker symbol BKCH and is based on the Solactive Blockchain Technology and Hardware Index, which includes such major technology companies like Intel, Micron Technology, and Advanced Micro Devices.
As Hawkins noted, the fund doesn’t want to invest in $20 mln market cap companies because of the high risks. “Investors need to be investing in the well-established global infrastructure to blockchain, not necessarily taking risks on the startup blockchain development companies,” he said.
Canada’s first blockchain ETF, created by Harvest Portfolios and focused on blockchain corporations, was approved this February. The Blockchain Technologies ETF from Harvest Portfolios has dropped by 25% since its launch in February and has lost 17% from its issue price of C$10. The actively managed Evolve Blockchain ETF has decreased by 20% since March 6, 2018.
According to Bloomberg, bitcoin-based ETFs Ark Web x.0 ETF (ARKW) and the Ark Innovation ETF (ARKK) were the best performing funds last year.
Earlier this month, the Hong Kong-based digital currency trading platform OKEx launched its cryptocurrency-based ETF, which allows investors to invest in six different coins, including BTC, ETH, LTC, BCH, EOS and OKEx’s token called OKB. A few days ago, another major exchange Huobi Pro created its ETF based on the company’s recently launched benchmark index of ten digital assets.