Reality Shares has launched the Reality Shares Nasdaq NexGen Economy China ETF (BCNA US) on Nasdaq Exchange, the first ETF to provide targeted access to Chinese companies leading the blockchain technology revolution.
Eric Ervin, CEO of Reality Shares.
The fund tracks the Reality Shares Nasdaq Blockchain China Index, which seeks to identify and invest in Chinese companies committing material resources to develop and implement 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 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.
BCNA’s index components are determined by Reality Shares’ proprietary Blockchain Score methodology, which evaluates companies based on seven key factors, including: role in blockchain ecosystem, blockchain product stage, blockchain economic impact, Blockchain Institute membership, research and development expenditure, company filings and innovation. In addition, the fund’s advisory board is stacked with six well-regarded blockchain and cryptocurrency executives who are involved in the research process.
“China is quickly becoming a global epicenter for blockchain innovation,” said Eric Ervin, CEO of Reality Shares. “In 2017, the nation filed for more blockchain-related patents than any other country in the world, and the Chinese government recently endorsed blockchain technology as an economic ‘breakthrough’. China’s blockchain industry presents an incredibly exciting and long-term investment opportunity, and through BCNA, investors can now easily access this emergent market.”
The index rebalances semiannually and is composed of 31 constituents. Information technology stocks make up approximately two-thirds (65.5%) of the total index exposure while a quarter (25.8%) is dedicated to financials and the remainder to consumer discretionary. The largest constituents are Alibaba (4.4%), Baidu (4.2%), Jiangsu Zhongnan Construction (4.2%) and DHC Software (3.8%).
BCNA has an expense ratio of 0.78%. Income generated within the fund is distributed to investors on a quarterly schedule.
Reality Shares entered the blockchain technology space earlier this year with the launch of the Reality Shares Nasdaq NexGen Economy ETF (BLCN US), which is also listed on Nasdaq Exchange. BLCN also selects firms leading the blockchain revolution but has a global investment mandate. It has $120 million in assets under management and an expense ratio of 0.68%.