WisdomTree launched a new thematic equity ETF in Europe offering exposure to companies developing and using blockchain technology.
The WisdomTree Blockchain UCITS ETF was listed on London Stock Exchange in US dollars (WBLK LN) and the British pound (BKCN LN) as well as on top Xetra (WBKN GY) and Italian scholarship (IM WBLK) in euros.
Blockchain, a decentralized and distributed ledger that securely records digital transactions, is expected to be one of the most disruptive innovations in recent history due to its potential impact on business models in virtually every segment of the economy. economy.
According to analysis by Markets and Markets, the blockchain industry is expected to grow from $4.9 billion at the end of 2021 to $67.4 billion by 2026, representing a compound annual growth rate of 68.4 %.
The fund is linked to the property WisdomTree Blockchain UCITS Index which selects its components from a universe of shares listed in developed countries and certain emerging countries. Chinese companies that maintain listings on stock exchanges in developed markets, or are available through the Stock Connect program, are eligible for inclusion.
The methodology excludes any company with a market cap of less than $150 million or an average daily trading volume of less than $500,000.
WisdomTree identifies blockchain-related businesses by using a natural language procession algorithm to filter publicly available information such as financial news, company profiles, and company posts for appropriate keywords related to this theme. Specifically, the process aims to identify two types of blockchain businesses: enablers and engagers.
Blockchain Enablers refer to cryptocurrency miners as well as companies that develop components for the blockchain ecosystem, such as hardware and software infrastructure.
Blockchain Engagers refer to companies that provide blockchain and cryptocurrency services (such as consulting services, software, and financial services) or those that have significantly adopted blockchain technology to improve the net income through higher sales, increased efficiency and reduced costs.
Index constituents are weighted equally while capping the combined weight of blockchain catalysts at 30%. According to WisdomTree, this weighting limit reflects the company’s belief that miner rewards will decrease over time for several reasons, including protocol configurations such as halvings.
The ETF comes with an expense ratio of 0.45%, significantly cheaper than the Invesco CoinShares Global Blockchain UCITS ETF (BCHN LN)Europe’s largest blockchain themed ETF, which houses $520 million and comes with an expense ratio of 0.65%.
Pierre Debru, Head of Quantitative Research & Multi-Asset Solutions, Europe, WisdomTree, said: “Due to their high growth potential, investors often view investing in digital assets or blockchain-related assets as a thematic investment. This is a good paradigm to adopt to conceptualize investment in space. The variety of blockchain applications and use cases is becoming increasingly evident and can be seen in entertainment, cloud storage, and gaming, among others. While Bitcoin was the first blockchain created and aimed to be a revolutionary payment system, the ecosystem has largely evolved outside of the “payment sphere”. Over the years, the idea of blockchain has been extended to support smart contracts and record keeping of non-fungible tokens (NFTs). The future looks bright for companies involved in blockchain, even though we are only in the early stages of proliferation.
Alexis Marinof, Head of Europe, WisdomTree, added, “WBLK combines our self-indexing expertise with our deep knowledge of the digital asset and blockchain ecosystems, providing investors with pure exposure to this disruptive tech megatrend. The ETF is a natural evolution of our multi-award-winning thematic ETF platform and has strong synergies with our crypto asset ETP platform. We believe blockchain is a transformative technology that has the potential to disrupt industries and enable new business models. The potential applications for the technology are endless, and we expect to see new blockchain use cases emerge over the coming decades.