Invesco launches blockchain ETF

Invesco launches blockchain ETF

Invesco has teamed up with Elwood Asset Management to launch an exchange-traded fund targeting companies involved with blockchain technology.

The Invesco Elwood Global Blockchain Ucits ETF aims to deliver the performance of the Elwood Blockchain Global Equity index by physically investing in the index constituents. 

The index offers exposure to global companies in developed and emerging markets that participate or have the potential to participate in the blockchain ecosystem.

It is designed to evolve with the potential growth of blockchain technology.

A blockchain enables the transfer of assets to create a traceable and permanent record of all transactions involving those particular assets. 

Cryptocurrencies were the first assets to use the blockchain technology, but assets can also be physical, or they could be medical records, legal contracts or any other information that flows between multiple parties.  

Gary Buxton, head of EMEA ETFs at Invesco, said: "We believe the potential for blockchain technology to disrupt the status quo of companies in virtually every industry makes for a strong long-term investment case.

"This new fund offers exposure with the added benefit of Elwood’s expertise along with the attractions of our ETF structure."     

The index, which is calculated for Elwood Asset Management by Solactive AG, currently has 46 per cent in information technology, 23 per cent in financials, 9 per cent in communication services and 8 per cent in both the materials and consumer discretionary sectors. 

The three largest geographical allocations are to the US at 39 per cent, Japan at 29 per cent and Taiwan at 12 per cent. 

The index is reviewed and rebalanced quarterly. 

Bin Ren, CEO of Elwood, said: "Blockchain has been around for a decade, but many people still see it just as the technology behind cryptocurrencies. The true potential, however, may extend far beyond that. 

"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.

"We believe the potential for blockchain to change the global economy is greatly under-appreciated in today’s market, much like the internet was in the beginning, when most people couldn’t see past its usefulness for email."

Adrian Lowcock, head of personal investing at Willis Owen, said: "The term blockchain sends shivers down my spine and probably many other investors as it has promised a lot but we have yet to see any significant investment opportunities for investors. 

"As with all technology the profit from such opportunities are not always easy to see and the market isn’t clearly defined, this ETF does recognise this by backing companies which are already profitable but could benefit from their investment and exposure to blockchain such as Taiwan Semiconductor Manufacturing.

"But overall the blockchain still feels very frontier technology, one that is still finding business opportunities that could profit from it."

He added: "Invesco do rightly flag this up as opportunities in the ‘developing’ or ‘potential’ phase.