Best Blockchain ETFs for Q2 2022

LEGR, BLCN, and BLOK are the best blockchain ETFs for Q2 2022

Blockchain exchange-traded funds (ETFs) own stocks in companies that have business operations in blockchain technology or profit from it in some way. Blockchain is made up of complex blocks of digital information and is increasingly used in banking, investing, cryptocurrency, and other sectors.

Though 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 that have no direct involvement in cryptocurrency.

Key Takeaways

  • The broader information technology (IT) sector outperformed the market over the past year, although all three blockchain ETFs on our list underperformed.
  • The top blockchain ETFs, ranked by one-year trailing total return, are LEGR, BLCN, and BLOK.
  • The top holdings of these ETFs are Class B shares of A.P. Moller—Maersk A/S, International Business Machines Corp., and NVIDIA Corp., respectively.

Five 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). This list excludes the Bitwise Crypto Industry Innovators ETF (BITQ), the VanEck Digital Transformation ETF (DAPP), and the Global X Blockchain ETF (BKCH), all of which launched within the past year and do not have enough trading history to be included in our rankings.

Though there is no benchmark index for the blockchain industry, the broader tech sector is a reasonable reference point. The S&P 500 Information Technology Sector Index has outperformed the broader market in the past year, providing one-year trailing total returns of 19.6%, compared with 18.6% for the S&P 500 as of Feb. 3, 2022. Note that all three blockchain ETFs below underperformed the broader market over that period. The best-performing blockchain ETF for the second quarter (Q2) of 2022, based on performance over the past year, is the First Trust Indxx Innovative Transaction & Process ETF (LEGR).

We examine the three blockchain ETFs below. All numbers below are as of Feb. 3, 2022.

First Trust Indxx Innovative Transaction & Process ETF (LEGR)

  • Performance Over One-Year: 13.0%
  • Expense Ratio: 0.65%
  • Annual Dividend Yield: 1.26%
  • Three-Month Average Daily Volume: 25,355
  • Assets Under Management: $156.7 million
  • Inception Date: Jan. 24, 2018
  • Issuer: First Trust

LEGR tracks the Indxx Blockchain Index, which gauges the performance of companies that 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. Financials make up the largest portion of the portfolio at just over 40%, followed by information technology (IT) and consumer discretionary stocks. LEGR’s top three holdings are Class B shares of A.P. Moller—Maersk A/S (MAERSK.B:CSE), a Danish shipping company; ENGIE SA (ENGI:PAR), a French multinational utility company; and Advanced Micro Devices Inc. (AMD), a semiconductor manufacturer.

Siren Nasdaq NexGen Economy ETF (BLCN)

  • Performance Over One-Year: -11.6%
  • Expense Ratio: 0.68%
  • Annual Dividend Yield: 0.61%
  • Three-Month Average Daily Volume: 62,095
  • Assets Under Management: $223.4 million
  • Inception Date: Jan. 17, 2018
  • Issuer: SRN Advisors

BLCN tracks the 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. BLCN’s top three holdings are International Business Machines Corp. (IBM), technology hardware and services company; Class A sponsored ADRs of Baidu Inc. (BIDU), a China-based Internet services and artificial intelligence company; and Class A shares of Mastercard Inc. (MA), a financial services company.

Amplify Transformational Data Sharing ETF (BLOK)

  • Performance Over One-Year: -14.9%
  • Expense Ratio: 0.71%
  • Annual Dividend Yield: 1.09%
  • Three-Month Average Daily Volume: 683,078
  • Assets Under Management: $1.0 billion
  • Inception Date: Jan. 16, 2018
  • Issuer: Amplify Investments

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. The fund also says its investments are aimed at giving investors "indirect crypto exposure." It follows a blended strategy, investing in a mix of value and growth stocks of various market capitalizations around the world, and is composed mostly of companies operating within the software, capital markets, and IT services industries. The fund’s top three holdings are NVIDIA Corp. (NVDA), a maker of graphics processing units and computer chips; SBI Holdings Inc. (8473:TKS), a Japan-based financial services and investment company; and Class A shares of Coinbase Global Inc. (COIN), the operator of a cryptocurrency exchange platform.

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