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First Trust launches First Trust Indxx Innovative Transaction & Process ETF

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First Trust Advisors has launched a new index-based ETF, the First Trust Indxx Innovative Transaction & Process ETF.  

The fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an index called the Indxx Blockchain Index (the index). The index, which is created and administered by Indxx, LLC, tracks the performance of exchange-listed companies across the globe that are either actively using, investing in, developing, or have products that are poised to benefit from a new technology known as blockchain. The index seeks to include only companies that have devoted material resources to the use of blockchain technologies. To be included in the index, a company must meet strict eligibility criteria which include market capitalisation and trading minimums.
 
The index construction process sorts the companies into categories based on their exposure to blockchain technology and selects only those companies which are actively investing resources into products or services that use blockchain technology. The selected companies are equally weighted within their category and the index is capped at 100 companies.
 
Blockchain is essentially a network of computers that keep transactions secure in a decentralised database, or “digital ledger,” similar to a shared spreadsheet, that the network can see and must approve before it can be verified and recorded. Once recorded, no one person can change it without the agreement of others and it is nearly impossible to tamper with. A growing number of industries and institutions are looking to embed blockchain technology into their day-to-day processes. Blockchain allows customers and suppliers to connect directly, without the need for a central entity, like a bank or financial institution, to make a transaction.
 
“Indxx is excited to have developed one of the world’s first indices to provide diversified exposure to the global blockchain space,” says Rahul Sen Sharma, Partner, Indxx, LLC. “We believe that blockchain is an exciting new technological innovation and our index research and development team is proud to have built an index that effectively targets it via a disciplined and transparent approach.”
 
Blockchain is the technology that underpins digital currencies, like bitcoin, but it has many more possible uses with the potential to move data of any kind swiftly and securely. “Although blockchain is still in its early stages, it promises to disrupt a variety of industries, potentially improving efficiency and security, while also reducing or removing the need for intermediaries,” says Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust. “This ETF enables investors to gain exposure to a diversified portfolio of companies that are involved in this cutting edge innovation.”

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