The UK based affiliate of First Trust Advisors, First Trust Global Portfolios, has launched what it calls Europe’s first blockchain UCITs ETF – The First Trust Indxx Innovative Transaction and Process UCITS ETFs (BLOK).
Tracking the Indxx Blockchain Index, this physically replicated innovative ETF aims to provide an efficient way to gain exposure to a spread of companies that are actively investing resources into products or services that enable and use blockchain technology.
The firm writes that blockchain is essentially a network of computers that keep transactions secure in a decentralized 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.
Tracking the yield and price of the Indxx Blockchain Index, the First Trust Indxx Innovative Transaction and Process UCITS ETF will hold eligible securities classified by Indxx based on their exposure to blockchain technology and/or the potential to benefit from the increased process efficiency the technology could provide. Focusing exclusively on active enablers and active users of blockchain, the index will only consider companies with a minimum market cap of USD250 million and a three month average daily turnover value of USD1 million. Capped at 100 constituents, the index is rebalanced and reconstituted semi-annually.
Derek Fulton, (pictured with the team), CEO at First Trust Global Portfolios says: “We are pleased to bring to market this innovative UCITS ETF – BLOK. 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 First Trust Indxx Innovative Transaction and Process UCITS ETF offers exposure to this growing investment class leveraging the liquidity and efficiency that a UCITS ETF structure provides.”
“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 at Indxx. “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.”
The First Trust Indxx Innovative Transaction and Process UCITS ETF will have a management fee and TER of 65bps.