Grayscale Investments, the biggest global digital currency asset manager, announced in a press release today the launch of its first ETF, the Grayscale Future of Finance ETF (GFOF). The ETF focuses on both the companies and the technologies driving the financial industry forward through innovation.
The fund tracks the Bloomberg Grayscale Future of Finance Index, an index compiled by Bloomberg Intelligence analysts, and is centered on three pillars that Grayscale believes capture the drivers for the future of global finance. The company believes that the digital economy is going to be a major driver for the development and growth of the global economy going forward, and GFOF works to capture this shift.
Companies within the index fall under one of three pillars; the financial foundations, which includes exchanges, asset managers, brokerages, and wealth managers that utilize the digital economy; technology solutions, which includes companies creating and providing the technology used within the digital economy; and digital asset infrastructure, which encompasses digital asset miners, energy management, and the activities that underpin and power the digital ecosystem as a whole.
With so many crypto equity funds being launched in the last year, it’s a different take on the space that offers investors a different strategy and exposure than those focused on crypto alone.
“Many think about digital currencies as yet another asset class – a tool for portfolio diversification and/or alpha generation,” explained David LaValle, senior managing director, global head of ETFs at Grayscale, in a communication to ETF Trends. “The implications of the next evolution of the global financial system – what we call the digital economy – are only just emerging, and go far beyond the digital currency industry to include a number of other companies; Grayscale Future of Finance ETF (symbol: GFOF) is designed to capture this theme and secular shift.”
The digital economy presents opportunities to create better market efficiencies while providing access to new capital avenues, with the added benefit of cost reduction by largely eliminating intermediaries. GFOF isn’t a play on the DeFi space, however, but instead takes a somewhat more traditional approach to investing and utilizes it within the digital asset space.
“There is a clear difference between investing in a ‘decentralized protocol’ (DeFi) and its related digital currency vs. investing in the institutions, technology, and infrastructure that are powering, building, and advancing the digital economy. DeFi refers to the decentralized financial services and applications built on top of the blockchain, while GFOF is investing in traditional, publicly traded businesses that support these blockchains (ie. mining, exchanges, and other related services),” explained LaValle.
The ETF does not invest in cryptocurrencies directly or via derivatives, but it can have indirect exposure through the companies it invests in. At launch, top holdings include PayPal Holdings (PYPL) at 9.65%, Coinbase Global (COIN) at 8.30%, Silvergate Capital (SI) at 7.97%, and Robinhood (HOOD) at 7.84%.
“GFOF seeks to offer investors exposure to companies at the intersection of finance, technology, and digital assets — companies that are building the digital economy and that we believe represent the ‘future of finance’ – all through the familiar ETF wrapper,” said Lavalle.
GFOF carries an expense ratio of 0.70%.
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