Crypto ETP issuer ETC Group is delving into the world of thematic ETFs with the launch of its first equity ETF targeting digital assets and blockchain.
The ETC Group Digital Assets & Blockchain Equity UCITS ETF (KOIN) is set to list on the London Stock Exchange, Borsa Italiana and Deutsche Boerse with a total expense ratio (TER) of 0.60%.
Tracking the Solactive ETC Group Digital Assets and Blockchain Equity index, KOIN offers exposure to 30 companies involved in cryptocurrency mining, blockchain and blockchain based services, cryptocurrency trading and the manufacture of hardware related to digital assets and blockchain.
Securities in the underlying benchmark are adjusted on a quarterly basis. They must also have a minimum market cap of $100m, a minimum daily trading volume of $1m and must have their primary listing on a regulated exchange within Solactive’s ‘relevant list’ of developed markets.
The initial index universe is constructed using Solactive’s natural language processing algorithm, ARTIS, which sifts through financial news, business profiles and company publications to find candidates with potentially significant exposure to its underlying theme.
From this, 30 stocks classed as ‘pure play’ that meet size and liquidity requirements are selected as constituents. If there are fewer than 30 companies in the pure play universe, non-pure play securities are added until 30 components are reached.
HANetf, which is partnering with ETC Group on the launch, said KOIN will act as alternative for investors unable to gain direct access to cryptocurrencies. It added research from ETC Group showed KOIN’s underlying index has a 0.7 correlation to bitcoin.
Commenting on the launch, Bradley Duke, CEO of ETC Group said: “Digital assets and blockchain have begun to persist in almost every sector and industry worldwide.
“Due its secure data, transparency and efficiency, blockchains and distributed ledger technologies are transforming a wide variety of industries, from banking and financial services, to healthcare and life science.”
Hector McNeil co-founder and co-CEO at HANetf, added: “Investors are increasingly looking for alternative ways to access both underlying crypto markets and the blockchain technology underpinning this high growth industry, and they can do this both through ETC products such as the BTCetc Bitcoin Exchange Traded Cryptocurrency(BTCE) and now through KOIN.
“This is similar to the way investors access gold through both investing in the commodity directly and also through and gold mining companies or gold miner ETFs.”
The arrival of KOIN comes six months after the launch of the VanEck Vectors Digital Assets Equity UCITS ETF (DAPP) in May and a week after the Rize Digital Payments Economy UCITS ETF (PMNT). A bitcoin equities strategy was thefirst ETF launchedby new issuer Melanion Capital in October, theMelanion BTC Equities Universe UCITS ETF (BTC).
It also comes less than a fortnight after HANetf’s last launch, the SparkChange Physical Carbon EUA ETC (CO2), in partnership with SparkChange.