Volt Equity, a San Francisco-based investment company focused on the technology sector, has launched an ETF offering exposure to companies within the bitcoin industry while incorporating an options strategy overlay to enhance performance.
Just a few companies will end up dominating the bitcoin industry, believes Volt.
The Volt Crypto Industry Revolution and Tech ETF (BTCR US) has been listed on NYSE Arca and comes with an expense ratio of 0.85%.
The actively managed fund selects its constituents from a universe of developed and emerging market common stocks from across the market capitalization spectrum.
Volt first identifies companies with exposure to bitcoin and its supporting infrastructure. Eligible firms include those that hold a majority of their net balance sheet assets in bitcoin or derive a majority of their revenue or profits from bitcoin-related activities such as mining and lending bitcoin or manufacturing bitcoin mining equipment.
The ETF does not invest directly in bitcoin or other digital assets.
Volt believes that there will likely be just a few companies that end up dominating the bitcoin industry. The fund’s portfolio will, therefore, contain a relatively concentrated mix of firms reflecting Volt’s best ideas for future industry winners.
In terms of companies that hold a majority of their net assets in bitcoin, security selection is driven by the stock-to-flow model which evaluates the current stock of bitcoin against the flow of new bitcoin mined that year.
The ETF’s prospectus notes that the fund will also seek diversification by investing up to 20% of its assets in broad equity market ETFs or selecting non-bitcoin-focused technology companies such as those that derive at least 50% of their revenue from semiconductors or artificial intelligence chips.
At launch, the ETF contained 24 companies with significant concentration in the top three positions. The largest holdings are Bitfarms (18.0%), Marathon Digital (17.7%), Microstrategy (13.1%), Power & Digital Infrastructure Acquisition (5.9%), Hut 8 Mining (4.9%), Riot Blockchain (4.4%), and Bit Digital (3.9%).
The fund’s options overlay consists of opportunistically purchasing put options on the Nasdaq 100, S&P 500, or ETFs linked to these two indices, in order to hedge against broad declines in the technology sector. The fund may also purchase call options on individual securities held in the portfolio in a bid to enhance returns from positive performance in these stocks.
The fund is Volt’s first solo play in the ETF space, although not its first move in the industry.
In January this year, Volt partnered with New York-based Simplify Asset Management to introduce a suite of four options-enhanced thematic ETFs providing exposure to robotic cars, fintech, pop culture, and cloud computing & cybersecurity.