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 blockchain industry, as represented by blockchain ETFs, has had a mixed performance relative to the broader market in the last year.
- The ETFs with the best 1-year trailing total return are BLCN, BLOK, and KOIN.
- The top holdings of these ETFs are JD.com Inc., Galaxy Digital Holdings Ltd., and NVIDIA Corp., respectively.
The blockchain ETF universe is comprised of about 5 ETFs that trade in the U.S., excluding leveraged and inverse funds. The blockchain sector, as measured by these funds, has had a mixed performance relative to the broader market. The funds we highlight below have significantly outperformed the S&P 500's total return of 12.0% in the past year, while the other funds in this space have underperformed the market. The best performing blockchain ETF, based on performance over the past year, is the Reality Shares Nasdaq NexGen Economy ETF (BLCN). We examine the top 3 best blockchain ETFs below. The performance figure above is as of November 3; all other numbers in this story are as of November 4, 2020.
ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.
- 1-Year Trailing Total Return: 40.6%
- Expense Ratio: 0.68%
- Annual Dividend Yield: 0.63%
- 3-Month Average Daily Volume: 64,221
- Assets Under Management: $128.9 million
- Inception Date: January 17, 2018
- Issuer: Reality Shares
BLCN is a large-cap ETF is broadly focused on the technology sector across developed markets worldwide and that follows a blended strategy. The fund 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 JD.com Inc. (JD), a Chinese e-commerce company; Microsoft Corp. (MSFT), a developer of software, video games, and computing products; and Square Inc. (SQ), a provider of mobile-payment solutions.
- 1-Year Trailing Total Return: 39.6%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 1.56%
- 3-Month Average Daily Volume: 53,958
- Assets Under Management: $132.1 million
- Inception Date: January 17, 2018
- Issuer: Amplify
BLOK is a multi-cap fund broadly focused on companies in the technology sector of developed markets, and is more specifically focused on businesses involved in blockchain technology. The fund follows a blended strategy of investing in a mix of growth and value stocks. The ETF's top three company holdings include Galaxy Digital Holdings Ltd. (GLXY:TSE), a merchant bank dedicated to the digital assets and blockchain technology sector; Silvergate Capital Corp. (SI), the parent company of Silvergate Bank, a financial services company serving fintech and digital currency clients; and Square.
- 1-Year Trailing Total Return: 18.6%
- Expense Ratio: 0.95%
- Annual Dividend Yield: 1.46%
- 3-Month Average Daily Volume: 6,839
- Assets Under Management: $11.9 million
- Inception Date: January 30, 2018
- Issuer: Innovation Shares LLC
KOIN is a large-cap ETF that invests primarily in growth stocks and tracks the Innovation Labs Blockchain Innovators Index, which is comprised of companies involved in, invested in, or that have adopted either cryptocurrency or blockchain technology. The ETF's top three holdings include NVIDIA Corp. (NVDA), a semiconductor company; Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), a Taiwan-based multinational semiconductor company; and PayPal Holdings Inc. (PYPL), a provider of online payments solutions.