Inveso rolled out two ETFs last fall offering exposure to the cryptocurrency industry, each one giving investors exposure to different facets of the growing space.
The two funds include the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC), which takes a broader approach aiming to capitalize on blockchain developments, and the Invesco Alerian Galaxy Crypto Economy ETF (SATO), which offers more focused exposure to the cryptocurrency industry.
SATO, the larger of the two funds, tracks an index that holds cryptocurrency-focused equities and crypto ETPs and trusts.
SATO maintains an aggressive risk profile by maintaining two different sleeves in its portfolio. The first sleeve (fixed at 85% of assets) comprises equally weighted stocks of pure-play digital asset companies that are engaged in cryptocurrency and its relative mining, buying, or enabling technologies, according to ETF Database.
Sleeve two (15% allocation) consists of ETP and private trust components which may only hold the Grayscale Bitcoin Trust (GBTC). The fund will not invest directly in cryptocurrencies, instead using a Cayman Island subsidiary that holds crypto assets. Any income received from the fund’s investments in the subsidiary will be passed through to investors as ordinary income, according to ETF Database.
BLKC is also passively managed, following an index with exposure to global stocks of blockchain users, cryptocurrency mining, buying, and enabling technologies.
BLKC may gain its exposure using other ETPs and OTC-private investment trusts linked to cryptocurrencies, also including the Grayscale Bitcoin Trust (GBTC). The index’s 85% equity allocation is composed of pure-play companies in the industry, including those that mine; facilitate buying, selling, and transfer of cryptocurrency assets; provide custody for cryptocurrency assets; provide semiconductors; provide cryptocurrency mining machines; report cryptocurrency assets on their balance sheets; and engage in the R&D of blockchain technologies for non-cryptocurrency-related purposes, according to ETF Database.
The selected stocks are equally weighted. BLKC will not invest directly in cryptocurrencies, instead allocating 15% of its total assets to other ETPs and trusts that do directly invest in cryptocurrencies, according to ETF Database.
The funds each charge a 60 basis point expense ratio.
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