Stoxx has unveiled the iStoxx Yewno Developed Markets Blockchain Index targeting companies that are geared towards the development of technologies related to blockchain.
Matteo Andreetto, CEO of STOXX.
The index has been launched in partnership with Yewno, a provider of Artificial Intelligence (AI) solutions to the financial sector, and is set to underlie an ETF in Canada.
Stoxx has collaborated previously with Yewno on a series of AI-focused indices.
Blockchain is essentially a network of computers that keeps transactions secure in a decentralized database, or digital ledger, 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. A growing number of industries and institutions are looking to embed blockchain technology into their day-to-day processes.
The index’s parent universe is the Stoxx Developed Markets Total Market Index which consists of equities listed globally excluding emerging market stocks.
Each company is assigned a ‘blockchain IP’ score using Yewno’s capabilities within the fields of complex systems, computational linguistics, and artificial intelligence to determine a firm’s exposure to the blockchain theme. This blockchain IP score is derived from two metrics.
Firstly, the Blockchain Intellectual Property Exposure is defined as the ratio of the number of blockchain patents awarded to a company over the most recent three-year period to the total number of patents awarded to that company over the same period. It provides an indication of the importance of blockchain research and applications to the overall activities of each company.
Secondly, Blockchain Contribution is defined as the ratio of the number of blockchain patents awarded to a company over the most recent three-year period to the total number of blockchain patents awarded to all companies in the index universe. It provides an indication of the importance of each company’s blockchain research and applications to the overall blockchain-related activities of other companies in the index universe.
The 100 stocks with the highest blockchain IP scores are selected for inclusion. Constituents are weighted by free-float market capitalization adjusted to increase the weight of those stocks with the higher blockchain IP scores. No single stock may account for more than 8% of the index weight and the sum of weights above 4.5% are constrained to 35% total.
Ruggero Gramatica, CEO of Yewno, commented, “Yewno continues its journey in the creation of unique instruments able to surface hidden relationships across billions of increasingly fragmented, structured and unstructured data points leveraging our proprietary dynamic knowledge graph and Inference Engine. Once again, we are proud to strengthen our relationship with key partners such as Stoxx in order to build solutions that readily capture emerging signals from a multitude of information sources.”
“Blockchain is one of the most disruptive megatrends of our times and will play a major role in the transition towards a digital, highly technological world,” added Matteo Andreetto, CEO of Stoxx. “[Yewno’s] advanced approach, identifying the constituents for this index in a fully automated way is complementing Stoxx’s approach to offer rules-based and transparent investment strategies.”
According to Stoxx, the index will be used as the underlying reference for an ETF to be listed on the Canadian market in coming weeks.
The new ETF will likely compete with several other blockchain-related ETFs in Canada, including the Horizons Blockchain Technology & Hardware Index ETF (BKCH CN), the First Trust Indxx Innovative Transaction and Process ETF (BLCK CN) and the Blockchain Technologies ETF (HBLK CN).