Bloomberg reports June 20 that the Toronto Stock Exchange will list a new blockchain exchange traded fund (ETF). The Horizons Blockchain Technology and Hardware Index ETF fund will join other ETFs on the TSX, such as ETFs from Harvest Portfolio Group Inc. and Evolve Funds Group Inc.
ETFs are a type of marketable security that tracks an index, commodity, or basket of assets that are represented in the fund’s shares. The price of an ETF can vary throughout the day as they are bought or sold on a stock exchange.
Horizons ETF holdings include firms that develop applications related to blockchain such as Hive Blockchain Technologies Ltd., Digital Realty Trust Inc., and GPU manufacturer Nvidia Corp.
The new ETF, using the symbol BKCH, is based on the Solactive Blockchain Technology and Hardware Index, which includes major industry players such as Intel Corp., Advanced Micro Devices Inc., and Micron Technology Inc.
Steve Hawkins, Co-Chief Executive Officer of Horizons ETFs Management Canada Inc. said in a phone interview with Bloomberg that :
“We don’t know which individual blockchain companies are going to work, we have no idea what the extent of the blockchain applications will be, but we do know people will have to invest in the infrastructure to build out blockchain. It’s going to be these ancillary services to the blockchain technology where the winners are going to be at the end of the day.”
“We don’t want to be investing in a $20 million market cap company at this stage, there’s just way too much risk to that,” Hawkins explained in the interview. “Investors need to be investing in the well-established global infrastructure to blockchain, not necessarily taking risks on the startup blockchain development companies.”
The first blockchain-based ETF in Canada was approved in February of this year and was started by Harvest Portfolios. The ETF focuses on small and large-scale blockchain firms. Bloomberg revealed that the Blockchain EFT from Harvest Portfolios has lost 25 percent since its launch, declining 17 percent from its initial issue price of $10 CAD. The actively managed Evolve Blockchain ETF, meanwhile, fell 20 percent since March 6.
Earlier in June, investment firm VanEck and SolidX Partners Inc. requested approval from the U.S. Securities and Exchange Commission to list a Bitcoin-based ETF. If this request is approved, the fund’s share will reportedly be $200,000, in order to attract institutional investors.