While cryptocurrency exchange-traded funds (ETF) may still be having a difficult time finding their place in the U.S., they’re moving along elsewhere. Invesco, an investment management company, launched the first blockchain ETF on the London Stock Exchange on Monday. The launch was made possible through a partnership with Elwood Asset Management, a London-based investment company that focuses on digital assets.
According to an announcement (in pdf) by Elwood, the new “Invesco Elwood Global Blockchain UCITS ETF” is meant to allow companies to generate “real earnings” through blockchain technology. Invesco’s head of EMEA (Europe, Middle East and Africa) ETF Equity Product Management, Chris Mellor, explains, “The potential for blockchain to drive real earnings is huge, but it is often hidden within companies involved in other areas. This ETF offers investors access to companies with real earnings now, but with the added potential of blockchain-related earnings not reflected in their share prices.”
The ETF includes 48 different companies that have some degree of exposure to blockchain innovation. Among these are Taiwan Semiconductor Manufacturing, Advanced Micro Devices (AMD), Microsoft and Intel. The fund carried a management fee of 0.65% per year and is designed to allow capitalize on the performance of the Elwood Blockchain Global Equity Index (BGEI) by “physically investing in the index constituents.”
Elwood CEO Bin Ren asserts, “Blockchain has been around for a decade, but many people still see it just as the technology behind cryptocurrencies. The true potential, however, may extend far beyond that. We are beginning to see the technology being used by financial services companies in particular, but we expect greater application of blockchain technology across a wide range of industries. We believe the potential for blockchain to change the global economy is greatly underappreciated in today’s market, much like the internet was in the beginning, when most people couldn’t see past its usefulness for email.”
In terms of sector allocation, the Elwood BGEI contains 45% in IT, 23% in financials, 9% in communications services and 8% between materials and consumer discretionary sectors,” according to the company. Geographically, allocations include the U.S. (39%), Japan (29%) and Taiwan (12%) as the top three regions.
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