The First Trust Global Portfolio in partnership with Indxx, a blockchain index is launching a blockchain ETF that it claims to be the first one in Europe. This ETF will be tracking the companies that are investing in blockchain technology with certain boundaries to it.
The first trust Indxx innovative transaction and process UCITS ETF
The First Trust Global Portfolios (FTGP) has launched a blockchain ETF (Exchange Traded Fund) in partnership with Indxx, an index provider. The First Trust Indxx Innovative Transaction and Process UCITS ETFs are claimed to be the first blockchain ETF of Europe that will physically track the Indxx Blockchain Index and provide the investor’s exposure to the companies that are into blockchain technology.
The CEO of FTGP, Derek Fulton, stated:
“We are pleased to bring to the market this innovative ETF. With an increasing number of institutions harnessing blockchain technology and applications spanning a wide range of industries, we believe the efficiency, auditability, and transparency provided by blockchain offer the potential for significant growth opportunities.”
He further mentioned:
“The ETF offers exposure to this growing investment class leveraging the liquidity and efficiency that a UCITS ETF structure provides.”
Features and constraints of Blockchain ETF
An ETF is basically a marketable security that tracks an index and trades like a stock while offering lower fees and higher liquidity that makes them an attractive fund for individual investors. As for UCITS i.e., “Undertakings for Collective Investment in Transferable Securities” it is a European Union based mutual fund. It is extremely recognized and popular across Europe, South America, and Asia.
A notable point here is that these are blockchain ETFs and not bitcoin ETFs. Though there has been bitcoin ETFs in the past, cryptocurrency in general coupled with ETFs aren’t recognized by the regulatory authorities. However, blockchain is not only recognized but also used by governments and businesses alike.
Blockchain ETFs track the stock market prices of those company that have invested in the blockchain technology, unlike bitcoin ETFs that will be tracking the bitcoin cryptocurrency which is extremely volatile.
Currently, there are about 82 companies listed in Indxx Blockchain ETF that the ETF will be tracking. Out of these 82, 62 companies are active users while the remaining 20 are active enablers.
The other constraint of this physically replicated fund includes the requirement of $250 million market cap from an investee company and a minimum three-month average daily turnover value of $1million. Furthermore, the index will be capped at 100 stocks and rebalanced semi-yearly. With a total expense ratio of 0.65%, on April 10, it will get listed on the London Stock Exchange.
With the increase in the number of companies implementing this technology, it makes sense that the company will go for a blockchain ETF. The company has clarified that it will only track those companies that are actively participating in this technology’s development.
Just a day before, european countries signed a deal on blockchain development and now blockchain ETFs are being launched into the market. Looks like Europe is trying to become a blockchain hub.
Do you think blockchain ETF will be the new attraction for the crypto investors?
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Being an active participant in the Blockchain world, I always look forward to engage with opportunities where I could share my love towards digital transformation.