Components, such as Microsoft (MSFT), IBM (IBM), and Taiwan Semiconductor (TSM), are huge companies that are just starting out in blockchain, so investors need to be aware that they’re going to be getting a lot more than just blockchain exposure. I like the positions in Digital Garage (OTC:DLGEF), the Japanese tech company, and SBI Holdings (OTCPK:SBHGF), with its stake in Ripple (XRP-USD), representing more pure blockchain plays. I know that Overstock (OSTK) is mentioned a lot when it comes to blockchain, but I’d like to see its story play out a little further. Overall, I think this is a fairly good mix of names.
The main knock on blockchain ETFs is that with so few companies going all in on the technology, there is very little in the way of pure exposure. That will change over time as the industry develops, but for investors who want early (although imperfect) blockchain exposure, in my opinion, BLOK would be the way to go. The fact that it’s actively managed gives it the ability to react quickly to any industry changes. That it comes nearly as cheap as it passively managed counterparts is a bonus. I also like that it casts a fairly wide net in identifying companies it can at least initially target before narrowing it down to its final portfolio of 50 or so names. Some funds focus more on companies that develop blockchain tech and less so on companies that merely use it. I like BLOK’s balanced approach that targets companies that are developing, using, and exploring blockchain.
Picking individual winners in the space is going to be difficult, so investing in a diversified portfolio of names is the way to go. For my money, BLOK would be the best choice of the bunch.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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