First Trust Global Portfolios launches blockchain ETF
Increased use of the 'digital ledger'
First Trust Global Portfolios (FTGP) has launched what is thought to be Europe's first blockchain ETF with index provider Indxx.
The First Trust Indxx Innovative Transaction and Process UCITS ETF will provide investors with exposure to companies which are actively investing in resources in the space or have products which are poised to benefit from blockchain technology.
Physically replicated, the ETF will track the Indxx Blockchain ETF which currently costs of 82 companies, 20 of which are "active enablers" and 62 of which are "active users".
The 20 active enablers will make up 50% of the portfolio while the 62 active users will make up the other 50%.
The disruptive power of blockchain for financial services firms
Further constraints include a minimum market cap of $250m, a minimum three month average daily turnover value of $1m while the index is capped at 100 stocks.
Blockchain enables users to keep transactions secure in a decentralised database or "digital ledger". An increased number of firms across a wide range of sectors are looking at ways to implement this technology in their day-to-day processes.
The technology allows customers and suppliers to connect directly to make a transaction, without the need for a central entity such as a financial institution.
The firm said it only tracks companies which have devoted material resources to the use or development of this technology.
Rebalanced semi-annually, the ETF has a total expense ratio (TER) of 0.65% and listed on the London Stock Exchange on 10 April.
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Derek Fulton, chief executive of FTGP, said: "We are pleased to bring to market this innovative ETF.
"With an increasing number of institutions harnessing blockchain technology and applications spanning a wide range of industries, we believe the efficiency, auditability and transparency provided by blockchain offers the potential for significant growth opportunities.
"The ETF offers exposure to this growing investment class leveraging the liquidity and efficiency that a UCITS ETF structure provides."
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