First Trust launches Europe’s first blockchain ETF

Apr 13th, 2018 | By | Category: Equities

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First Trust Global Portfolios, the UK-based affiliate of First Trust, the sixth largest provider of ETFs in the US, has launched Europe’s first blockchain ETF – the First Trust Indxx Innovative Transaction and Process UCITS ETFs (BLOK LN).  

Derek Fulton CEO at First Trust Global Portfolios

Derek Fulton (right), CEO of First Trust Global Portfolios, and colleagues at the launch of the ETF on the LSE.

The strategy has already been launched by First Trust in North America,  on Nasdaq and the Toronto Stock Exchange, but this is its first foray into Europe.

Two share classes of the ETF have been listed on the London Stock Exchange – BLOK LN tradable in sterling and LEGR LN in US dollars – each with a total expense ratio (TER) of 65bps.

Cross listings on to other European exchanges are likely to follow.

BLOK physically replicates the Indxx Blockchain Index, providing investors with exposure to companies which actively invest resources into products or services that enable and use blockchain technology.

Blockchain is a network of computers that keep transactions secure in a decentralised database, or digital ledger. Once recorded, no one person can change it without the agreement of others and it is nearly impossible to tamper with.

Indxx, the NY-based index provider behind the index, selects securities based on their exposure to blockchain technology and/or the potential to benefit from the increased efficiency the technology could provide. It focuses exclusively on active enablers and active users of blockchain.

The index only considers companies with a minimum market cap of $250m and a three-month average daily turnover value of $1m. It is capped at 100 constituents, and rebalanced and reconstituted semi-annually.

It has a global remit but is currently significantly exposed to the US which commands a 40.9% weight. China follows the US with 7.4% weight, then Germany with 7.0%. 

The top three company holdings are ASUSTeK Computer (2.8%), Gemalto (2.7%) and Intel (2.7%).

An increasing number of industries are looking to embed blockchain technology into their day-to-day processes. The advantage of the technology is that it allows customers and suppliers to connect directly, without the need for a central entity (like a bank or financial institution) to make a transaction.

Derek Fulton, CEO at First Trust Global Portfolios, said: “We are pleased to bring to market this innovative UCITS ETF – BLOK. With an increasing number of institutions harnessing blockchain technology and applications spanning a wide range of industries, we believe the efficiency, auditability and transparency provided by blockchain offers the potential for significant growth opportunities.”

He continued: “The First Trust Indxx Innovative Transaction and Process UCITS ETF offers exposure to this growing investment class leveraging the liquidity and efficiency that a UCITS ETF structure provides.”

Rahul Sen Sharma, Partner at Indxx, added, “Indxx is excited to have developed one of the world’s first indices to provide diversified exposure to the global blockchain space. We believe that blockchain is an exciting new technological innovation and our index research and development team is proud to have built an index that effectively targets it via a disciplined and transparent approach.”

In addition to the two First Trust ETFs (First Trust Indxx Innovative Transaction and Process ETF (LEGR US) on Nasdaq and First Trust Indxx Innovative Transaction and Process ETF (BLCK CN) on Toronto), there are several other blockchain ETFs in North America, including the Reality Shares Nasdaq NexGen Economy ETF (BLCN US) on Nasdaq and the Amplify Transformational Data Sharing ETF (BLOK US) on NYSE Arca.

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