DAPP Serves Up a Diverse Digital Portfolio

One common misconception about the VanEck Vectors Digital Transformation ETF (DAPP) is that it is similar to Bitcoin or Ethereum. Cryptocurrencies are decentralized assets. DAPP, meanwhile, is a publicly traded index that features companies with securities and cash flows.

Glibness aside, it easy to understand why this misconception happens. The phrase “digital assets” sounds like it could be shorthand for crypto. The reality is that the phrase digital assets is an umbrella term, encompassing more than just cryptocurrencies. DAPP’s holdings are tightly focused around the crypto space, with two of its three biggest holdings being digital wallet Coinbase Global, Inc. (COIN) and Bitcoin mining company Marathon Digital Holdings Inc. (MARA), representing 8.62% and 8.18% of the fund’s $40.9 million AUM. However, DAPP’s correlation to Bitcoin it is only 0.69. The Ethereum correlation is even lower, sitting at 0.45.

In an interview with VanEck’s Ed Lopez on the Trends with Benefits podcast, Head of Digital Assets Research Matthew Sigel said: “The United States is an economy that has undergone an absolutely dramatic transition. We were a bulk economy, we were a tangible asset economy, we valued the piece of machinery – the airplane, the automobile. We don’t value that anymore. We value the algorithm. The artificial intelligence. The software program… The intangible.”

The strength of digital assets as a space is evident in DAPP’s recent performance. The fund is up nearly 30% over the past four weeks, better than any other technology equity ETF. What sets DAPP apart is that the focus is on companies that are on the forefront of building the infrastructure of the new digital economy.

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