First Trust Enters Blockchain ETF Melee

January 25, 2018

First Trust today rolled out an ETF that seeks to capture the performance of companies involved in blockchain technology. The First Trust Indxx Innovative Transaction & Process ETF (LEGR) tracks an index that has 67 components as of mid-January.

The fund comes with an expense ratio of 0.65%, which is cheaper than the two blockchain ETFs that launched last week. The actively managed Amplify Transformational Data Sharing ETF (BLOK) and the index-based Reality Shares Nasdaq NexGen Economy ETF (BLCN) charge 0.70% and 0.68%, respectively.

Blockchain is basically a digital ledger with decentralized storage that can be privately or publicly maintained. It is also the technology that drives cryptocurrencies such as bitcoin.

"Although blockchain is still in its early stages, it promises to disrupt a variety of industries, potentially improving efficiency and security, while reducing or removing the need for intermediaries,” said First Trust Senior Vice President and ETF Strategist Ryan Issakainen.

“This ETF enables investors to gain exposure to a diversified portfolio of companies involved in this cutting-edge innovation,” he added.

Methodology

LEGR’s index methodology sorts the global universe of blockchain-related stocks into three tiers, but only includes the top two in its final selection pool.

Essentially, a company must be directly involved in the development or usage of blockchain technology, with companies that meet minimum size and liquidity requirements ranked and selected based on their exposure to the technology in question. Up to 100 components can be included in the index, according to the prospectus.

Components are equally weighted within their respective tiers.

Contact Heather Bell at [email protected]

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