At the onset of the COVID-19 in March, Bitcoin traded below $4,000. However, on December 17th, this cryptocurrency crossed the $23,000 mark, jumping 200% on a year-to-date basis. This phenomenal growth is a result of increased interest in cryptocurrencies by institutional investors. With investments made by billionaires like Paul Tudor Jones and Stanley Druckenmiller, bitcoin is becoming a mainstream asset. Economic uncertainty, aggressive fiscal policy, and loose monetary policy are driving inflows into crypto assets.
Given the volatility and risk of crypto, many investors might prefer ETFs that provide exposure to not only bitcoin but also the blockchain. According to JP Morgan, the rising demand for bitcoin by institutional investors is likely to boost inflows into funds with exposure to cryptocurrencies as opposed to gold.
Against this backdrop, Amplify Transformational Data Sharing ETF (BLOK), Reality Shares Nasdaq NextGen Economy ETF (BLCN), First Trust Indxx Innovative Transaction & Process ETF (LEGR), and Goldman Sachs Motif Finance Reimagined ETF (GFIN) are well-positioned to soar.
Amplify Transformational Data Sharing ETF (BLOK)
BLOK tracks companies likely to reap benefits from Blockchain. The ETF tracks the Blockchain BLOK 50 Global Index developed by the Emerita Capital Indices and EQM Indexes as its benchmark. The index constitutes blockchain companies involved in proof-of-concept testing; partners of proof of concept, bitcoin mining, as well as companies broadly exploring Blockchain.
BLOK also invests indirectly in bitcoin through ownership of another indirect investment vehicle, the Bitcoin Investment Trust.
The ETF has an asset base of $277.9 million and has exposure to companies with core operations in Blockchain technology. It surpassed $250 million in assets under management on December 17th. It has over 57 stocks in the portfolio wherein Silvergate Capital Corp (SI), Square, Inc (SQ). PayPal Holdings (PYPL), and Marathon Patent Group (MARA) are its major holdings with a weightage of 6.3%, 5%, 4.1%, and 3.9%, respectively.
BLOK has seen $99 million worth of fund inflows over the past year and it has garnered returns of 83.7% during this period. The fund has an expense ratio of 0.70%, higher than the category average.
BLOK has surged 83% on a year-to-date basis to end yesterday’s trading session at $34.31. Over the past six months, the ETF rallied 66.9%.
How does BLOK stack up for the POWR Ratings?
A for Trade Grade
A for Industry Rank
B for Buy & Hold Grade
B for Peer Grade
B for Overall POWR Rating.
It is currently ranked #42 of 98 ETFs in the Technology Equities ETFs group.
Reality Shares Nasdaq NextGen Economy ETF (BLCN)
BCLN invests in companies with a market capitalization of over $200 million that commit material resources to develop, research, support, innovate, or utilize blockchain technology for their proprietary use or use by others. The fund reflects the performance of the Reality Shares Nasdaq Blockchain Economy Index.
BLCN has an asset base of $178.4 million with exposure to large-cap technology companies. Galaxy Digital Holdings, Square, Inc. (SQ), Canaan Inc. (CAN), and Baidu, Inc (BIDU). with weightage of 2.9%, 2.3%, 2.2% and 2.1%, respectively, comprise its top holdings. Funds worth $71.4 million have flown into the ETF over the past year. It has also garnered one-year returns of over 56.3%. With an expense ratio of 0.68% above the category average, this ETF is slightly pricier.
Chinese E-commerce giant Baidu, one of the top holdings of BLCN, just launched a beta version of a blockchain service called “Xuperchain”. MIT Technology Review report states, “The service is supposed to let small and medium-sized businesses and developers cheaply launch so-called decentralized applications or dapps.”
On a year-to-date basis, BLCN climbed 55.3% to close yesterday’s trading session at $39.71. Over the past six months, the ETF surged 39.4%.
BLCN’s POWR Ratings reflect this promising outlook. It has a “Buy” rating with a “B” for Trade Grade and Buy & Hold Grade. It is currently ranked #20 in the same industry.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
LEGR formed in 2018 reflects the performance of the Indxx Blockchain Index and invests in stocks of companies operating across information technology, blockchain technology sectors. These companies have committed material resources for the use of blockchain technologies. The companies are diversified across market capitalization, as well as growth and value stocks.
The fund’s expense ratio is 0.65%, which is more than the category average of 0.52%. Major technology companies like Baidu Inc. (BIDU) Micron Technology (MU), Xilinx (XLNX), and Taiwan Semiconductor (TSM) represent the top holdings for this fund. The fund with an asset base of $53.8 million not only offers exposure to tech giants from the United States but also across geographies.
A total of $2.3 million funds has flown into the ETF over the past year, while the fund has delivered returns of 16.5% during the period. LEGR soared 16% on a year-to-date basis to end yesterday’s trading session at $37.07.
It is no surprise then that LEGR is rated “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade, Industry Rank, and Buy & Hold Grade. In the Technology Equities ETFs group, LEGR is ranked #61.
Goldman Sachs Motif Finance Reimagined ETF (GFIN)
GFIN tracks the Motif Finance Reimagined Index that invests in payment technologies like blockchain, and the digitization of finance irrespective of sector, geography, or market capitalization. The major holdings for GFIN are Alphabet Inc (GOOGL), Alibaba Group Holding, Facebook (FB), and Microsoft Corporation (MSFT) with 1.9%, 1.8%, 1.7%, weightage respectively.
The ETF has assets under management of $50.5 million with an expense ratio of 0.50%, which is more than the Category Average of 0.39%. During the past year, the net fund flow over the past year was $35.16 million. Over the past year, the fund has garnered returns of 20.3%.
GFIN’s POWR Ratings reflect this promising outlook. It has a “Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank.
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BLOK shares were trading at $33.46 per share on Thursday morning, down $0.85 (-2.48%). Year-to-date, BLOK has gained 78.45%, versus a 16.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.
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