WisdomTree launches blockchain industry ETF
WisdomTree has unveiled a novel theme based equity ETF in Europe that provides coverage to firms developing and leveraging blockchain technology. The WisdomTree Blockchain UCITS ETF is being traded on the London Stock Exchange in US dollars (WBLK LN) and British pounds (BKCN LN) and also in euros on Xetra (WBKN GY) and Borsa Italiana (WBLK IM).
Blockchain, a decentralized, distributed ledger that safely documents digital trades, is anticipated to be one of the most revolutionary technologies in the latest history because to its potential influence on economic models in almost all economic sectors. As per an estimate by Markets and Markets, the blockchain market is projected to rise from $4.9 billion at the end of last year to $67.4 billion by 2026, a CAGR of 68.4%.
The fund is associated to the exclusive WisdomTree Blockchain UCITS Index, which chooses its members from a spectrum of equities traded in developed and some developing market nations. Chinese companies listed on developed financial markets exchanges or accessible via the Stock Connect program are qualified for inclusion. The approach excludes companies with a market cap of less than $150 million or a daily transaction volume of less than $500.
WisdomTree discovers blockchain-related companies by applying a natural language processing algorithm to sift through publicly accessible material including financial data, business profiles, and corporate releases in search of pertinent keywords associated with this topic. The methodology attempts to distinguish two distinct sorts of blockchain businesses: Enablers and Engagers. Blockchain Enablers include bitcoin miners in addition to firms who are building hardware and software frameworks for the blockchain environment.
Blockchain Engagers are organizations that offer blockchain and cryptocurrency services (including consultancy, software, and financial services) or have implemented blockchain technology extensively to increase net revenue via increased sales, more efficiency, and reduced expenses.
The components of the index receive weightage in a uniform manner, whereas the cumulative weight of Blockchain Enablers is capped at 30%. This weighting limitation represents WisdomTree’s view that miner payouts will drop over time for multiple reasons, notably protocol configurations such as halvings.
The ETF has a cost ratio of 0.45%, which is much less than the Invesco CoinShares Global Blockchain UCITS ETF (BCHN LN), the biggest blockchain-focused ETF in Europe, which holds $520 million and has an expense ratio of 0.65%.
WisdomTree’s Head of Quantitative Research & Multi-Asset Solutions, Europe, Pierre Debru, stated, “Investors often view digital assets or blockchain-linked assets as theme investments due to their great growth capabilities. This is a useful framework for conceptualizing space investment. Entertainment, cloud storage, and gaming are just a few of the industries where blockchain applications and utility applications are turning out to be more obvious.
Although Bitcoin was the initial blockchain to be developed and was intended to be a breakthrough payment method, the environment has expanded well beyond the ‘payment sector’. The concept of blockchain has developed over time to allow smart contracts and the storage of Non-Fungible Tokens (NFTs). Even though we are in the initial phases of blockchain adoption, the future seems bright for blockchain-based businesses.
WisdomTree’s Head of Europe, Alexis Marinof, said, “WBLK unites our experience in self-indexing and our in-depth understanding of the crypto currency and blockchain environments to provide investors with genuine exposure to this path-breaking technology megatrend. The ETF is a logical progression of our multiple-award-winning thematic ETF platform, and it has excellent synergies with the existing crypto asset ETP framework.
We think blockchain is a technology with the potential to shake up industries and create unique business models. The possible uses of the technology are limitless, and we anticipate the emergence of fresh utility cases in the next years.”