BlackRock launches crypto industry ETF

May 4th, 2022 | By | Category: Equities

BlackRock has launched a new thematic equity ETF in the US providing exposure to companies supporting the crypto asset industry.

BlackRock launches blockchain technology ETF

There are several US-listed ETFs targeting blockchain or crypto industry themes.

The iShares Blockchain and Tech ETF (IBLC US) has been listed on NYSE Arca with an expense ratio of 0.47%.

The fund does not invest in cryptocurrencies either directly or indirectly through the use of derivatives.

The ETF is linked to the NYSE FactSet Global Blockchain Technologies Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations above $100 million and average daily trading volumes greater than $1m.

The methodology harnesses FactSet’s Revere Business Industry Classification System (RBICS) to screen for companies operating in industries related to the crypto ecosystem. Securities identified through this step are then assigned to one of two Tiers:

Tier 1 consists of companies deriving at least 50% of their revenue from developing blockchain technologies, mining digital assets, or providing cryptocurrency trading and exchange services.

Tier 2, meanwhile, comprises ancillary businesses that derive less than 50% of their revenue from these activities, as well as developers and manufacturers of semiconductor chips used for crypto mining.

The index targets a minimum of 35 constituents, selecting all Tier 1 securities and at least ten Tier 2 securities according to float-adjusted market capitalization.

Constituents are weighted by float-adjusted market capitalization while setting a floor of 75% for the aggregate weight of Tier 1 securities. Tier 1 securities are capped at 12% and the combined weight of stocks above 4.5% is limited to 45%. Tier 2 securities are capped at 4%.

As of 26 April, more than two-thirds (68.4%) of the index weight was allocated to US-listed stocks with the next-largest country exposures being Canada (9.4%), China (7.4%), and Israel (4.5%).

Information technology stocks dominated, accounting for over three-quarters (76.5%) of the total exposure with most of the remaining weight allocated to the financials sector at 20.0%.

Coinbase Global, Marathon Digital, and Riot Blockchain all held notable positions of around 10% followed by Galaxy Digital (6.7%) and IBM (5.4%).

The fund joins a crowded field of US-listed ETFs targeting blockchain and crypto industry themes. The largest of these is the Amplify Transformational Data Sharing ETF (BLOK US) with around $900m in assets, while the cheapest is the recently launched Fidelity Crypto Industry and Digital Payments ETF (FDIG US) which costs just 0.39%.

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