As crypto is something new to many investors and now we hear about crypto EFTs. Many questions are on the mind. What is a crypto EFT? How does it work?
In order to understand crypto ETfs, let us first know what is an ETF.
Exchange-traded funds (ETFs) are open-ended funds that trade on the secondary market, which means you can buy them via an online broker. ETFs provide a cheap way for the retail trader to gain exposure to a wide range of companies in a specific sector.
Where to Trade ETFS?
ETFs can be traded on most of the brokerage platforms like Etrade, WeBull, Robinhood and etc.
What is a Crypto ETF?
A crypto ETF is a pooled investment in companies that are active in the crypto universe. These companies may be involved in mining cryptocurrencies, providing services on the blockchain, or anything relating to digital assets. By owning an ETF, investors get some diversified exposure to the industry.
Current Crypto ETFs available to buy:
- Capital Link Global Fintech Leaders ETF (KOIN): It tracks companies with an economic interest in blockchain technology, but also because it picks the constituents using artificial intelligence (AI). This ETF classifies the companies it tracks into various categories: cryptocurrency users and payees, solution providers, and mining enablers.
Number of holdings: 45
Top holdings: Baidu, NVIDIA, Visa
Average daily volume: $503k
Securities lending allowed
2. First Trust Indxx Innovative Transaction & Process ETF (LEGR): The LEGR ETF provides exposure to global equities with an interest in blockchain technology. LEGR is an equally-priced index that is rebalanced and reconstituted twice a year. Facts are below:
Assets-under-management (AUM) $61.24 million
Price/book ratio 1.51
YTD return 4.44%
Baidu, Micron, PayPal among the largest holdings
Over 30% of the constituents are from the United States and other representative countries include Spain, India, France, Switzerland
3. BLCN (Siren Nasdaq NexGen Economy ETF) was one of the first ETFs of its kind: an ETF that invests in companies that use, research, and develop blockchain technologies. This fund’s index committee has interesting criteria for selecting the companies to invest in; it uses a combination of factors, such as material resources. Facts for this ETF:
$3.84 million average daily volume
Galaxy Digital, Baidu, Square are some of its largest holdings
Price/book ratio 2.37%
Dividend yield 1.57%
4. BLOK (Amplify Transformational Data Sharing ETF): This ETF’s investments are split into two main categories; one has direct exposure to companies deriving their revenues from the blockchain technology, and the other invests in companies that invest in the former. The ratio between the two categories is roughly 70:30. Here are the facts:
An open-ended fund with over $640 million AUM
Average daily volume exceeds $18 million
23% YTD return
Almost half of the companies are from the United States and other representative countries include Japan, Canada, Germany, the United Kingdom
MicroStrategy, Silvergate, and Marathon Patent are some of the bigger holdings
Price/book ratio 5.33%
Dividend yield 0.67%