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), Amazon.com Inc. (AMZN), and German-based SAP SE (SAP). 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.
The blockchain ETF universe is comprised of about 3 distinct ETFs, excluding inverse and leveraged ETFs, as well as funds with less than $30 million in assets under management (AUM). The best performing blockchain ETF for Q3 2020, based on performance over the past year, is the Reality Shares Nasdaq NexGen Economy ETF (BLCN). All numbers in this story are as of May 12, 2020.
- Performance over 1-Year: 11.7%
- Expense Ratio: 0.68%
- Annual Dividend Yield: 1.47%
- 3-Month Average Daily Volume: 15,841
- Assets Under Management: $55.7 million
- Inception Date: January 17, 2018
- Issuing Company: Reality Shares
BLCN is a large-cap ETF that follows a blended strategy, investing in both growth and value stocks. The fund is broadly focused on the technology sector across developed markets worldwide. It tracks the Reality Shares NASDAQ Blockchain Economy Index, which measures returns of companies involved in the development, research, support, or use of blockchain technology. The ETF's top three holdings include Overstock.com Inc. (OSTK), an e-commerce company selling discounted brand-name merchandise; Square Inc. (SQ), a provider of mobile-payment solutions; and SBI Holdings Inc. (8473), a Japan-based financial services company and venture-capital fund manager.
- Performance over 1-Year: 6.3%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 2.12%
- 3-Month Average Daily Volume: 34,532
- Assets Under Management: $83.2 million
- Inception Date: January 17, 2018
- Issuing Company: Amplify
BLOK is a multi-cap ETF that follows a blended strategy of investing in a mix of growth and value stocks. The fund is broadly focused on companies in the technology sector of developed markets, and is more specifically focused on businesses involved in blockchain technology. The ETF's top three holdings include GMO Internet Inc. (9449), a Japan-based company offering internet-related services to corporate clients; Digital Garage Inc. (4819), a Japan-based web solutions provider and business incubator; and Intercontinental Exchange Inc. (ICE), a company that operates marketplaces for global commodity and financial products.
- Performance over 1-Year: -6.7%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 2.22%
- 3-Month Average Daily Volume: 5,895
- Assets Under Management: $36.6 million
- Inception Date: January 24, 2018
- Issuing Company: First Trust
LEGR is a large-cap ETF that follows a blended strategy. The fund is broadly focused on the technology sector across developed markets and tracks the Indxx Blockchain Index. The ETF's top three holdings include NVIDIA Corp. (NVDA), a semiconductor company; PayPal Holdings Inc. (PYPL), an online payment-solutions provider; and Advanced Micro Devices Inc. (AMD), a semiconductor company.