Evolve cuts fee on bitcoin ETF just one week after launch

Feb 25th, 2021 | By | Category: Alternatives / Multi-Asset

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Evolve Funds has lowered the management fee on its Bitcoin ETF (EBIT CN) just one week after the fund launched on the Toronto Stock Exchange becoming the second directly backed bitcoin ETF to list on a major developed exchange.

Bitcoin ETFs

Evolve’s Bitcoin ETF now comes with a reduced management fee of 0.75%.

Effective immediately, the fund now comes with a management fee of 0.75%, down from 1.00% at launch.

Raj Lala, President and CEO at Evolve Funds, commented: “We are very pleased to provide investors with the most cost-effective bitcoin ETF today. Our bitcoin ETF allows investors to access physical bitcoin in a fully regulated manner in their brokerage account.”

Evolve will be hoping that the lower price tag helps to pique interest in the product which has notably lagged the Purpose Bitcoin ETF (BTCC.U CN) – the first bitcoin ETF to list on TSX – in terms of net inflows, trading activity, and assets under management despite launching just one day apart.

Both ETFs are nearly identical in that they track price movements in the world’s largest cryptocurrency and are 100% backed by actual bitcoin holdings which are kept in ‘cold storage’ – a safe, institutional-grade custody solution. The funds offer investors direct access to bitcoin without the technical challenges and risk of self-custody while ensuring liquidity and transparency through the ETF wrapper. At launch, both ETFs came with management fees of 1.00%.

Despite their similarities, the Purpose Bitcoin ETF has surged in popularity, recording over $160 million in trading volume on its first day, while Evolve’s Bitcoin ETF traded just $15m on debut. As of 24 February, the Purpose Bitcoin ETF houses more than $440m in assets compared to just $35m for the Evolve fund.

The disparity in success between the two funds highlights the benefits of being first to market for market-access products and could lead to an intensification of efforts by those seeking to launch the first bitcoin ETF in the US.

Evolve’s decision to promptly and aggressively compete on price suggests it may be concerned that investor activity will quickly coalesce around the most liquid product, which, in practice, will typically also be the largest product.

Purpose will no doubt be watching closely to see if the fee cut starts to erode its early-won market-share advantage.

Meanwhile, rival issuer CI First Asset is in the final stages of introducing its own bitcoin ETF, the CI Galaxy Bitcoin ETF. This third bitcoin ETF is expected to list on TSX in early March and, according to the fund’s most recent prospectus, will come with a management fee of 1.00%. Whether CI First Asset maintains this price tag in light of Evolve’s move remains to be seen.

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