While the U.S. still awaits the arrival of the first bitcoin ETF, Invesco has rolled out two funds that cover the cryptocurrency industry, but with one crucial difference.
While the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC) takes a broader view and includes the category identified as blockchain users, the Invesco Alerian Galaxy Crypto Economy ETF (SATO) purely focuses on the cryptocurrency industry itself.
The indexes underlying the new ETFs were developed by cryptocurrency giant Galaxy Digital in partnership with Alerian.
Both funds come with expense ratios of 0.60% and list on Cboe Global Markets.
"Today's launch opens up a new way for investors to access this fast-growing asset class, combining exposure to key companies in the cryptocurrency and blockchain ecosystem with an allocation to an investment vehicle that directly holds digital assets, all within the ETF wrapper," said John Hoffman, head of Americas, ETFs and indexed strategies at Invesco.
BLKC tracks the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index, which includes cryptocurrency miners, providers of supporting technologies, crypto buyers and blockchain users that are researching and developing blockchain technologies for uses other than cryptocurrencies. That last category opens the fund up to a range of other types of companies like Accenture, Facebook, Citigroup and Walmart, according to Hoffman.
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He notes that the fund offers broad exposure to blockchain as a technology.
SATO, on the other hand, covers all of those categories except for the blockchain users, offering a “more precise solution,” Hoffman says, describing the fund as more of a pure play around the miners, the technologies and the buyers of cryptocurrencies than its counterpart. It tracks the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts and ETPs Index.
SATO has 39 components in its underlying index compared to the 60 in BLKC’s index, a fairly material difference that results in very dissimilar returns when viewing the benchmarks’ performance histories. However, both funds’ indexes include a 15% weighting to the Grayscale Bitcoin Trust (GBTC), so there is some direct exposure to bitcoin in both portfolios. However, GBTC currently trades at a 13% discount to its net asset value, so it's not a perfect proxy for the cryptocurrency.
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