An exchange-traded fund (ETF) released by investment manager Invesco could provide investors with a means of gaining exposure to companies that are involved with blockchain. In other words, this particular fund could help them invest in firms that generate profits from using blockchain technology.
In addition, the security being offered is a UCITS (Undertakings for the Collective Investment of Transferable Securities) ETF, meaning that it complies with European Union (EU) regulations designed to protect investors. This type of security has established a foothold in the region, as EU data showed in 2017 that 75% of residents in the region held assets in these funds.
As a UCITS ETF, this fund benefits from established regulations, which contrasts with the uncertain regulatory environment that many digital currencies face at the time of this writing. As a result, investors who opt to put their money into this Invesco fund can benefit from reduced uncertainty.
Basics Of The Invesco Fund
Invesco announced the fund, which is named the Invesco Elwood Global Blockchain UCITS ETF, on 11th March. The company emphasized that it was designed to provide exposure to companies that could use blockchain technology to generate real earnings.
The investment manager revealed that it had worked with Elwood Asset Management, a firm that specializes in digital assets and blockchain technology, to create the fund. The ETF's objective is to provide exposure to the Elwood Blockchain Global Equity Index by investing in its individual components.
According to the Elwood site, the index "offers exposure to global companies in developed and emerging markets that participate or have the potential to participate in the blockchain ecosystem," and it was developed by Solactive AG, a German index provider. The site continues: "It is designed to evolve with the potential growth of blockchain technology," and will be rebalanced on a quarterly basis.
When the fund went live in March, it was reported that the index would initially consist of 48 companies with the sectors providing the most exposure being information technology (46%) and financials (23%).
Gary Buxton, head of EMEA ETFs at Invesco, weighed in on the broader industry and the opportunity presented by this new fund.
"We believe the potential for blockchain technology to disrupt the status quo of companies in virtually every industry makes for a strong long-term investment case," Buxton said. "This new fund offers exposure with the added benefit of Elwood's expertise along with the attractions of our ETF structure."
Elwood CEO Bin Ren also highlighted the benefit of offering investors this particular type of security. "An ETF gives a highly liquid and regulated way to gain exposure," he said. "This is the right point to start."
Ren elaborated: "Blockchain has been around for a decade, but many people still see it just as the technology behind cryptocurrencies."
He added that the true potential could extend beyond that. "We are beginning to see the technology being used by financial services companies in particular, but we expect the greater application of blockchain technology across a wide range of industries," Ren said.
Investors can use the Invesco Elwood Global Blockchain UCITS ETF to gain exposure to companies that leverage blockchain technology through a regulated security. By putting their funds into an ETF, they will know that their investment will follow pre-established regulations, providing them with a higher degree of certainty than investing in digital currencies individually.
Senior Market Specialist
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…