Invesco Ltd., a U.S.-based independent investment firm is launching a blockchain exchange-traded fund (ETF), reported the Financial Times on March 9.
The ETF is targeting firms that will likely generate income from using blockchain, the technology that underpins digital currencies such as Bitcoin and Ethereum.
The announcement of the Invesco Elwood Global Blockchain ETF marks a growing interest in distributed ledger technology (DLT) amongst asset managers.
New ETF to List on the London Stock Exchange
Per the report, the new ETF will debut on the London Stock Exchange (LSE) on March 11.
At launch, the blockchain ETF is set to invest in 48 companies based on a scoring system developed by Elwood Asset Management; an Alan Howard backed cryptocurrency firm.
Howard is a British hedge fund manager who co-founded Brevan Howard in 2002 with four other former Credit Suisse traders.
The ETF, which carries a management fee of 65 basis points, is planning to invest in Taiwan Semiconductor Manufacturing, a supplier of mining chips to cryptocurrency manufacturers.
Other companies in the ETF include CME Group (Chicago Mercantile Exchange & Chicago Board of Trade), a U.S. financial markets firm with a special interest in BTC futures trading, and well-known tech companies such as AMD, Apple, and Intel.
Elwood chief executive Bin Ren said that the uses cases of blockchain technology are not limited to digital assets but extends to other industries as well.
“We are beginning to see the technology being used by financial services companies in particular, but we expect greater application of blockchain technology across a wide range of industries.”
Invesco’s chief of EMEA (Europe, Middle East, and Africa) ETF, equity, and commodity product management, Chris Mellor, said that blockchain’s potential to positively impact revenue was not mirrored in the financials of major companies such Rio Tinto, an Anglo-Australian multinational company with interests in mining.
The mining firm’s assets include hydroelectric equipment that may prove beneficial in cryptocurrency mining.
Institutions Show an Appetite for the Crypto Industry
Established institutions are entering the crypto space, possibly opening the doors for more large institutions to follow suit.
Seven blockchain-based ETFs were launched in the United States but haven’t made major breakthroughs in terms of capital inflow from investors. Amplify Transformational Data Sharing – the largest ETF – has attracted $110 million in assets.
U.S. asset manager First Trust launched the Innovative Transaction & Process ETF, the first blockchain ETF listed in Europe on Borsa Italiana (Italy Stock Exchange) in February 2018. The ETF has more than $20 million in assets.
JP Morgan Chase, a leading financial institution in the world, launched the JPM Coin, an in-house dollar-pegged stablecoin reserved for corporate clients. The institution became the first major global bank to integrate blockchain technology in its main business.
BlackRock, the world’s leading asset manager with nearly $5.98 million (as of December 2018) in assets under management, said that it was evaluating cryptocurrencies in July last year.