India Market Regulator Approves First Blockchain Feeder Fund
Sebi, India’s market regulator, has endorsed the Invesco CoinShares Global Blockchain ETF Fund of Fund (FoF), which will be the foremost fund in the country to provide exposure to global enterprises involved in the blockchain environment. The feeder fund will make investments in the Invesco CoinShares Global Blockchain UCITS Exchange-traded Fund, which is based in Ireland (ETF).
The fund has stakes in companies such as Canadian bitcoin miner Bitfarms Ltd, US cryptocurrency exchange Coinbase Global Inc, and MicroStrategy Inc., which is the world’s largest corporate cryptocurrency holder. Its predecessor, the Invesco Elwood Global Blockchain UCITS ETF, was renamed after digital asset manager CoinShares International Ltd bought the ETF index business from Elwood Technologies, which led to the change in name.
The new fund offer for Invesco CoinShares Global Blockchain ETF FoF will commence on November 24 and finish on December 8, with the deadline for submissions being December 8. The fund managers for the scheme would be Neelesh Dhamnaskar (for equity investments) and Krishna Cheemalapati (for debt investments).
Blockchain technology is a digital ledger system that makes the process of recording transactions and tracking assets in a network much more efficient. By utilizing blockchain technology, virtually everything of value, from medical data to food supply chain transactions, can be monitored and tracked again.
When an Indian regulator agreed to allow the establishment of a blockchain fund, it did so at a time when the Indian government was considering the introduction of legislation governing cryptocurrencies like Bitcoin and Ethereum. To be clear, blockchain is not the same as bitcoin, but it is the technology that underpins bitcoin and allows it to function.
“While blockchain technology is still in its infancy, the potential for it to fundamentally alter the global economy is enormous. Like the internet, blockchain presents an opportunity for investors who can recognise and capitalise on this latent potential,” according to the product material from Invesco Mutual Fund.
In terms of performance, the Invesco CoinShares Global Blockchain UCITS ETF has generated a return of 94 percent over the past year and a return of 53 percent since its start in March 2019. As of the second quarter of 2021, the ETF with its headquarters in Ireland had assets under management (AUM) totaling $1.07 billion.
When it comes to sector weighting, information technology receives 49.98 percent of the vote, followed by financial services with 32.32 percent and communication services with 12.34 percent of the vote. With 4.83 percent of individual equities, Coinbase Global Inc has the largest allocation, followed by Japan’s GMO internet Inc (4.34 percent) and South Korea’s Kakao Inc. (4.32 percent).
According to the fund company, investors should be aware that the CoinShares Global Blockchain ETF FoF has a very high level of risk. The expense ratio of the underlying fund is 0.65 percent, which is low by industry standards. The cost ratio of the underlying fund as well as the feeder fund combined is limited to 2.25 percent per annum under Sebi rules, which is very noteworthy.
During the NFO period, the minimum investment is one thousand rupees, and after that, it is in multiples of one rupee. If units are redeemed or switched out before one month has passed from the date of allotment, there will be a 0.50 percent exit load, and there will be no exit load after that.