Harvest Portfolios launches Canada’s first blockchain ETF

Feb 9th, 2018 | By | Category: Equities

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Harvest Portfolios Group has launched the Blockchain Technologies ETF (HBLK CN) on the Toronto Stock Exchange.

Michael Kovacs, CEO at Harvest Portfolios Group.

Michael Kovacs, CEO at Harvest Portfolios Group.

The fund is the first ETF in Canada to offer targeted exposure to the theme of developing blockchain technology.

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 ETF tracks the Harvest Blockchain Technologies Index, which comprises equity securities of North American companies that are poised to potentially benefit from the development and implementation of blockchain and distributed ledger technologies.

Michael Kovacs, president & chief executive officer at Harvest Portfolios Group, commented, “Canada’s first blockchain ETF is designed to provide investors with access to this rapidly developing market segment. By replicating the Harvest Blockchain Technologies Index, HBLK will be invested to track the long term evolution of blockchain.”

The index covers the broad North American universe of publicly listed blockchain technology companies and is currently split into two segments: large-cap blockchain and emerging blockchain. The constituent companies underlying the index are diversified amongst established technology firms, payment providers, crypto miners, consultants and financial firms.

As the blockchain sector matures and gains critical mass, the index will transition into being exclusively focused on the emerging blockchain segment. This transition occurs linearly over five key growth stages. In the first stage, the index comprises less than 30 companies with a minimum average market cap of $250 million. Of these companies, 55% come from the emerging blockchain bucket, with the rest from the large-cap blockchain segment. With each successive transition phase, the minimum market cap of each company increases by $50m and the percentage allocation to the emerging bucket increases by 10%. The number of companies included in the index increases at each successive growth stage up to a maximum of 50 firms in the final phase.

While the fund may be the first in Canada to offer exposure to the blockchain theme, the US has already seen several launches in this space. These include the Innovation Shares NextGen Protocol ETF (KOIN US), the First Trust Indxx Innovative Transaction & Process ETF (LEGR US), the Amplify Transformational Data Sharing ETF (BLOK US) and the Reality Shares Nasdaq NexGen Economy ETF (BLCN US).

The Harvest fund has a 0.65% management fee, which is relatively low against some of the above mentioned US-listed funds.

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