Three top-performing blockchain ETFs provide exposure to the industry while avoiding the risks of the volatile cryptocurrency market, which has been shaken by the collapse of digital token exchange FTX and Bitcoin's plunge to a two-year low.
First Trust Indxx Innovative Transaction & Process ETF, Siren Nasdaq NexGen Economy ETF, and Amplify Transformational Data Sharing ETF, hold firms that use, invest in, or develop blockchain technology, which is being increasingly adopted by U.S. companies.
- The three top blockchain funds, ranked by one-year trailing total return, are First Trust Indxx Innovative Transaction & Process ETF, Siren Nasdaq NexGen Economy ETF, and Amplify Transformational Data Sharing ETF.
- The funds have underperformed the market in the last year, though the use of blockchain is rising in industries including financial services, healthcare, and tech.
- Blockchain ETFs invest only in stocks of regulated companies, many of which are large technology firms that have no direct involvement in cryptocurrency.
- The top holdings of these ETFs are Infineon Technologies AG, JPMorgan Chase & Co., and International Business Machines Corp., respectively.
Only three blockchain ETFs trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). All three have fallen faster than the S&P 500 Index, which has dropped by 8% in the last year as of Dec. 1.
The ETFs fell partly because blockchain technology is still associated with cryptocurrency due to the fact that it plays a central role in running digital currency systems. Yet blockchain use is surging in industries including logistics, payments, healthcare, and tech.
We examine the top three blockchain ETFs below. All numbers are as of Dec. 1, 2022.
- Performance Over One Year: -12.0%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 1.26%
- Three-Month Average Daily Volume: 15,103
- Assets Under Management: $118.9 million
- Inception Date: Jan. 24, 2018
- Issuer: First Trust
The fund tracks the Indxx Blockchain Index, which gauges the performance of companies that are using, investing in, or developing blockchain technology, or that have products that are positioned to benefit from the technology. The ETF normally invests a minimum of 90% of its net assets in equities that comprise the index. Financial stocks make up the largest portion of the portfolio at 36%, followed by information technology (IT) and communication services.
The ETF's three biggest holdings are Infineon Technologies AG (IFX:ETR), a German semiconductor manufacturer; SAP SE (SAP:ETR), a German enterprise management software company; and NVIDIA Corp. (NVDA), a maker of graphics processing units and other hardware.
- Performance Over One Year: -48.0%
- Expense Ratio: 0.68%
- Annual Dividend Yield: 0.61%
- Three-Month Average Daily Volume: 28,159
- Assets Under Management: $99.5 million
- Inception Date: Jan. 17, 2018
- Issuer: SRN Advisors
The fund tracks the Nasdaq Blockchain Economy Index, developed in partnership with Nasdaq, which tracks companies involved in activities including developing, researching, innovating, or using blockchain technology. The ETF owns primarily large-cap stocks from developed markets and follows a blended strategy, investing in growth and value stocks.
The fund's biggest holdings are JPMorgan Chase & Co. (JPM), the investment bank and financial services company; Class A shares of Mastercard Inc. (MA), a payment processing company; and GMO Internet Group Inc. (9449:TKS), a Japanese internet infrastructure, media, and advertising company.
- Performance Over One Year: -64.0%
- Expense Ratio: 0.71%
- Annual Dividend Yield: 1.09%
- Three-Month Average Daily Volume: 257,792
- Assets Under Management: $414.9 million
- Inception Date: Jan. 17, 2018
- Issuer: Amplify Investments
BLOK is an actively managed ETF that invests a minimum of 80% of its net assets in stocks of companies that develop and use of blockchain technologies. The fund says that its investments are aimed at giving investors "indirect crypto exposure" rather than investing directly in cryptocurrencies. It follows a blended strategy, investing in a mix of value and growth stocks of varied market capitalizations. The biggest three industry allocations are IT services, software, and capital markets, which together comprise more than two-thirds of the fund's holdings.
The ETF's biggest holdings are International Business Machines Corp. (IBM), a maker of hardware, software, and computing technology; Class A shares of Accenture Plc (ACN), an Irish information technology services company; and Overstock.com Inc. (OSTK), an ecommerce retailer.
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