Reality Shares, a San Diego-based asset manager and ETF issuer, has launched an ETF providing access to leading global companies involved in the creation and delivery of blockchain solutions.
Blockchain seeks to solve transactional challenges of counterparty trust through a decentralized, peer-to-peer distributed ledger.
Listed on Nasdaq, the Reality Shares Nasdaq NexGen Economy ETF (Nasdaq: BLCN) is linked to the Reality Shares Nasdaq Blockchain Economy Index and invests in companies committing material resources to blockchain technologies.
The index was created through a partnership between Reality Shares and exchange operator and index provider Nasdaq, and constitutes the joint research and analysis of both groups on the emerging development of blockchain technology.
Blockchain seeks to solve transactional challenges of counterparty trust by providing a transparent and secure process to transfer and digitally record information on a shared transaction database through a decentralized, peer-to-peer distributed ledger. In this regard, it is designed to facilitate the transfer of information that is guaranteed to be secure and known to all participants, and shared across a distributed network where the legitimacy of the transfer cannot be challenged.
The technology may be used to support a vast array of business applications in many different industries and markets, and the extent of its versatility has not yet been fully explored.
The universe of companies eligible for possible inclusion in the index is identified based on research and analysis conducted by Reality Shares and Nasdaq. The universe is then narrowed to include only those companies with market capitalizations greater than $200 million and a six-month average daily trading volume in excess of $1,000,000.
In order to qualify for inclusion in the index, companies must receive a high ‘Blockchain Score’ based on the following characteristics: role in blockchain ecosystem, blockchain product stage, blockchain economic impact, Blockchain Institute membership, research and development expenditure, company filings and innovation.
The final index comprises 50 to 100 stocks weighted based on their blockchain scores, with companies having higher scores weighted more heavily, and is rebalanced semi-annually.
The index currently includes 59 companies with market capitalizations ranging from circa $400 million to $700 billion. Major holdings are Intel, Overstock.com, IBM, Cisco, Hitachi and Microsoft. Information technology and financials are naturally the largest sector exposures, with weights of 57% and 32% respectively (as of 31/12/2017).
“The blockchain ecosystem potentially presents one of the most profound, long-term investment opportunities many of us have or will ever see in our lifetime,” said Eric Ervin, CEO of Reality Shares.
“Furthermore, blockchain is still in its infancy, and we are confident it will have far-reaching, disruptive effects in nearly every industry. In order to fully harness the potential of this exciting sector, we teamed up with other well-known groups – Nasdaq and the experienced members of our advisory board – to vet and qualify blockchain companies and identify trends and initiatives in our pursuit to become the leaders in blockchain investing.”
The ETF has gross expenses of 0.68% pa.