As Q2 begins, look to the four blockchain ETFs that are leading the way: Innovation Shares NextGen Protocol ETF (KOIN), Reality Shares Nasdaq NexGen Economy ETF (BCLN), Amplify Transformational Data Shrg ETF (BLOK) and First Trust Indxx Innovative Transaction & Process ETF (LEGR).
Blockchain allows digital information to be distributed, but not copied. Originally devised for cryptocurrencies, like Bitcoin, people are now discovering other potential uses for the technology.
4 Blockchain ETFs in the Race
So why should you consider investing in a blockchain ETF?
According to the World Economic Forum, “10% of the global GDP 1 is predicted to be stored on blockchain platforms by 2027.”
It’s the way of the future.
“This is an industry that we think that over several decades will be as revolutionary as the internet. We’re going to have several million people working in this industry, if not tens of millions,” Antonis Polemitis, blockchain expert and CEO of the University of Nicosia, said according to CNBC.
Innovation Shares NextGen Protocol ETF (KOIN)
The KOIN ETF is the first exchange-traded fund to use the twist of artificial intelligence and blockchain to identify and invest in blockchain innovators.
Cryptocurrencies and artificial intelligence are two of the most lucrative areas in investing and KOIN is harnessing them both, starting with a broad base of companies, and then using artificial intelligence to determine how engaged the companies are in the development of blockchain.
According to ETFDB, “The fund currently reads more like a large-cap tech fund than a pure-blockchain play, with holdings such as Amazon (AMZN), Microsoft (MSFT), Visa (V), Intel (INTC), Cisco Systems (CSCO) and Nvidia (NVDA). It has just around 40 components and invests one-third of the portfolio overseas.”
The index underlying KOIN screens for global stocks that are have a current or future economic interest in blockchain technology.
KOIN has seen $3 million YTD in flows and the current market price is $23.50.
Related: An ETF to Capitalize on the Disruptive Blockchain Technology
Reality Shares Nasdaq NexGen Economy ETF (BLCN)
The BLCN ETF holds shares of companies that committee “material resources” to blockchain technology research and development.
According to Benziga, “Each company included is analyzed and assigned a “Blockchain Score” by the Reality Shares board. The Blockchain Score quantifies how much each company is expected to benefit from the advancement of blockchain technology.”
BLCN holds 59 stocks from the technology, financial services, healthcare and industrial sectors. None of BLCN’s holdings command weights above 2.43%.
BCLN is rapidly attracting a follwing with total assets at $114,213,854.04 after just launching Jan. 17, 2018.
The current market price is $22.41.
Amplify Transformational Data Shrg ETF (BLOK)
The BLOK ETF also focuses on companies that are developing blockchain or blockchain-related technology.
According to Amplify, “BLOK is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in equity securities of companies actively involved in the development and utilization of blockchain technologies.” Amplify classifies each company included in the index as either “core” or “secondary” based on how closely-tied the company’s business is to blockchain development. “
According to Gartner Group, Blockchain is estimated to have delivered $4 billion in business value-add or technology innovation in 2017, with that growing to $21 billion by 2020, $176 billion in 2025, and $3.1 trillion by 2030,” said Amplify, BLOK’s issuer.
BLOK has seen $189.71 million flows YTD and the current market price is $18.91.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
The LEGR ETF tracks the Indxx Blockchain Index. That benchmark follows “companies across the globe that are either actively using, investing in, developing, or have products that are poised to benefit from a new technology known as blockchain. The index seeks to include only companies that have devoted material resources to the use of blockchain technologies,” according to a statement.
LEGR’s index is capped at 100 constituents and requires member firms to have market values of at least $500 million.
Companies in LEGR are split into three categories: active enablers, active users and active explorers. Active enablers are companies “actively developing blockchain technology products or systems for their own internal use and for the sale and support of other companies,” said First Trust. Active users are defined as firms use blockchain technologies while active explorers are companies that have publicly said they are considering use of blockchain technologies.
For more information on new fund products, visit our new ETFs category.