Blockchain exchange-traded funds (ETFs) own stocks in companies that have business operations in blockchain technology or in some way profit from it. Blockchain is made up of complex blocks of digital information, and increasingly is used in banking, investing, cryptocurrency, and other sectors. While blockchain is a relatively new technology, many of the companies that operate in the space are well established. Some examples include International Business Machines Corp. (IBM), Oracle Corp. (ORCL), and Visa Inc. (V). Many investors may be wary of risking an investment in blockchain due to the technology's association with the volatile cryptocurrency market. However, blockchain is not the same thing as cryptocurrency, and blockchain ETFs invest only in stocks of regulated companies, many of which are big blue-chip technology firms, and not in cryptocurrency directly.
- The 3 Blockchain ETFs outperformed the broader market over the last year.
- These 3 ETFs, ranked by 1-year trailing total return, are BLOK, BLCN, and LEGR.
- The top holdings of these ETFs are class A shares of MicroStrategy Inc., Galaxy Digital Holdings Ltd., and class A sponsored ADRs of Baidu Inc., respectively.
There are 3 blockchain ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). These ETFs have all outperformed the broader market over the past 12 months, posting higher total returns than the S&P 500's total return of 19.1%, as of February 1, 2021. The best-performing blockchain ETF for Q2 2021, based on performance over the past year, is the Amplify Transformational Data Sharing ETF (BLOK). We examine the 3 blockchain ETFs below. All numbers below are as of February 2, 2021.
- Performance over 1-Year: 112.0%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 1.72%
- 3-Month Average Daily Volume: 389,233
- Assets Under Management: $535.9 million
- Inception Date: January 17, 2018
- Issuer: Amplify
BLOK is an actively-managed ETF that invests a minimum of 80% of its net assets in stocks of companies engaged in the development and utilization of blockchain technologies. It follows a blended strategy, investing in a mix of value and growth stocks of various market capitalizations across the world. The fund is comprised of 55 holdings mostly operating within the software & services, diversified financials, and media & entertainment industries. The fund's top three holdings include class A shares of MicroStrategy Inc. (MSTR), a provider of enterprise software platforms; Marathon Patent Group Inc. (MARA), a digital asset technology company; and class A shares of Silvergate Capital Corp. (SI), a bank holding company whose subsidiary, Silvergate Bank, provides financial infrastructure solutions to participants in the digital currency industry.
- Performance over 1-Year: 62.8%
- Expense Ratio: 0.68%
- Annual Dividend Yield: 0.58%
- 3-Month Average Daily Volume: 92,038
- Assets Under Management: $219.1 million
- Inception Date: January 17, 2018
- Issuer: Reality Shares
BLCN tracks the Reality Shares Nasdaq Blockchain Economy Index, which gauges the performance of companies involved in developing, researching, supporting, innovating, or utilizing blockchain technology. The ETF follows a blended strategy, investing in growth and value stocks of large-cap companies across developed markets. Its top three holdings include Galaxy Digital Holdings Ltd. (GLXY:TSE), a multi-service merchant bank dedicated to the digital assets and blockchain technology industry; class A sponsored ADRs of Baidu Inc. (BIDU), a China-based Internet search provider; and class A sponsored ADRs of Canaan Inc. (CAN), a provider of integrated circuit microprocessors for supercomputing hardware.
- Performance over 1-Year: 22.5%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.95%
- 3-Month Average Daily Volume: 10,294
- Assets Under Management: $57.2 million
- Inception Date: January 24, 2018
- Issuer: First Trust
LEGR tracks the Indxx Blockchain Index, which gauges the performance of companies that either actively utilize, invest in, develop, or have products that are positioned to benefit from blockchain technology. The ETF normally invests a minimum of 90% of its net assets in equity securities that comprise the index. It follows a blended strategy of investing in both growth and value stocks of mostly large-cap companies. The fund is comprised of 100 holdings, most of which operate in the information technology and financial industries. Its top three holdings include class A sponsored ADRs of Baidu; Micron Technology Inc. (MU), a provider of memory and storage solutions; and sponsored ADRs of Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), a Taiwan-based multinational semiconductor contract manufacturing and design company.
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