Emerita Capital, a financial research firm specialising in blockchain, has partnered with index-provider EQM Indexes to launch the Blockchain BLOK 50 Global Index, tracking exposure to developments in blockchain technology.
Gabriel Rojo, founder of Emerita Capital Indices.
Blockchain is essentially a network of computers that keep transactions secure in a decentralized database, or digital ledger, similar to a shared spreadsheet, that the network can see and must approve before it can be verified and recorded. Once recorded, no one person can change it without the agreement of others and it is nearly impossible to tamper with.
Blockchain is the technology that underpins so-called cryptocurrencies, like bitcoin, but it has many more possible uses with the potential to move data of any kind swiftly and securely. A growing number of industries and institutions are looking to embed blockchain technology into their day-to-day processes.
The index, calculated by Solactive, is composed of 50 leading companies which develop or use blockchain-based technologies. The 50 constituents are either at the forefront of research and development into blockchain technology, partnering with blockchain companies, or profiting from blockchain-based applications such as cryptocurrency mining. To be eligible for index inclusion, a constituent must have a minimum market capitalisation of $200 million.
“We are excited to offer exposure to the leading companies engaged in advancing blockchain-based technology,” said Gabriel Rojo, founder of Emerita Capital Indices. “These companies offer investors the opportunity to participate in the growth of blockchain, while potentially serving as a less volatile hedge for blockchain-based applications such as cryptocurrency and ICOs. Based on backtested results, blockchain exposure has a low correlation to traditional asset classes and serves as potential diversifier for holders of bitcoin and other crypto assets.”
The index is significantly exposed to the US with 27 of the 50 constituents currently being US-listed firms. The largest constituents are Overstock.com (4.3%), Square, Inc (4.1%) and Advanced Micro Devices (4.0%), all of which are US-based companies.
The blockchain theme is hot property for ETF providers in the US at the moment with funds from Innovation Shares, First Trust, Amplify ETFs and Reality Shares all hitting the market in January 2018.