Technology

Meet the Biggest and Best Blockchain ETFs of 2019

Blockchain has been one of the biggest investing buzzwords in the past two years. Companies have been aggressively innovating with this platform, looking for new applications and the next big break.

This technology doesn’t just touch the future of financial systems. More recently, the auto industry has taken full advantage of this, and there are uses in tracking food, imports and exports, health care records, private transactions and so on. Some of the biggest questions surrounding this technology are where it could expand to next.

Some quick background on the technology: The blockchain is a decentralized, immutable store of information related to certain transactions. The blockchain claims to reduce third-party risk by eliminating intermediaries, such as banks, whose role was to provide (centralized) trust in the system — trust is replaced by immutable data that is not controlled by any party.

Although the hype for the blockchain has subsided recently, the potential for the technology is touted as being nearly unlimited. In the course of choosing where to invest for this theme specifically, there are some likely winners and losers. To mitigate this risk exchange-traded funds (ETFs) offer a very easy avenue.

ETFdb.com has collected much of the information surrounding these ETFs, among others, and made it easily accessible for those looking to get into the game. 24/7 Wall St. has included some of the biggest and best ETFs that fall under this thematic investing umbrella.

It is important to keep in mind that not all ETFs are created equal. Some of them may be full of companies that the public has never heard of, or they may be full of companies that are not U.S.-based and may not even trade on a primary U.S. stock exchange. To complicate things further, some investors might completely disagree that a company that dominates certain ETFs should even be listed within the theme due to its thematic exposure relative to its primary business.

Taking the caveats of ETFs in general into account, some investors and market pundits have bashed blockchain and cryptocurrencies that rely on blockchain.

Amplify Transformational Data Sharing ETF (NYSEARCA: BLOK) has been around since January 2018. The fund invests a large chunk of its net assets in equity securities of companies involved in the development and utilization of blockchain technologies. It has $100.1 million in assets under management, its overall expense ratio is 0.70% and it was last seen trading up nearly 29% with 2019 about to close. This fund’s top 10 holdings include many national blockchain firms:

  1. GMO Internet (4.69%)
  2. Digital Garage (4.52%)
  3. Kakao (4.01 %)
  4. Z Holdings (3.56%)
  5. SBI Holdings (3.33%)
  6. Line (3.31%)
  7. Square (3.01%)
  8. IBM (2.91%)
  9. Alphabet (2.70%)
  10. Goldman Sachs (2.70%)

Reality Shares Nasdaq NexGen Economy ETF (NASDAQ: BLCN) has been around since January 2018, and it aims to track the Reality Shares Nasdaq Blockchain Economy Index. It targets companies that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology for their use or for use by others. It had $65.5 million in assets under management. Its overall expense ratio is 0.68%, and it has traded up 32% so far in 2019. This fund has a total of 67 holdings. The top 10 holdings include many large-cap tech firms from the United States:

  1. ZhongAn Online P & C Insurance (2.26%)
  2. Advanced Micro Devices (2.13%)
  3. Digital Garage (2.04%)
  4. Line (2.02%)
  5. Nvidia (2.02%)
  6. Baidu (1.97%)
  7. SAP (1.95%)
  8. GMO Internet (1.91%)
  9. Fujitsu (1.87%)
  10. Microsoft (1.87%)

First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR) has been around since January 2018, and it tracks the Indxx Blockchain Index. The ETF targets companies that are actively using, investing in, developing or have products that are poised to benefit from blockchain technology or the potential for increased efficiency that it provides to various business processes. It had $44.6 million in assets under management, and its overall expense ratio is 0.65%. It has traded up nearly 25% year to date. The fund’s top 10 holdings are practically all large-cap domestic tech firms:

  1. AMD (1.95%)
  2. Taiwain Semiconductor Manufacturing (1.81%)
  3. Fujitsu (1.77%)
  4. Nvidia (1.76%)
  5. Alibaba (1.62%)
  6. Baidu (1.58%)
  7. Atos (1.56%)
  8. Microsoft (1.56%)
  9. Nordea Bank (1.52%)
  10. JD.com (1.52%)

Innovation Shares NextGen Protocol ETF (NYSEARCA: KOIN) has been around since January 2018. It aims to track the Innovation Labs Blockchain Innovators Index, and it targets companies that are known for their involvement in, investment in or adoption of cryptocurrency and blockchain technology. Its overall expense ratio is 0.95%, and it has $8.6 million in assets under management. So far, it has traded up 31% in 2019. The top 10 holdings include many major tech firms from the United States:

  1. Taiwan Semiconductor Manufacturing (5.37%)
  2. Nvidia (5.07%)
  3. Intel (4.66%)
  4. Mastercard (4.58%)
  5. Visa (4.53%)
  6. Microsoft (4.47%)
  7. SAP (4.06%)
  8. PayPal (3.96%)
  9. BP (3.92%)
  10. Nestle (3.89%)