Sylvia Jablonski is CEO and CIO of Defiance ETFs, a thematic issuer of ETFs with USD1 billion in assets. September saw the firm launch IBIT, based on short positions on the Amplify Transformational Data ETF (BLOK) as it faces the crypto winter.
IBIT is up 20 per cent this year, on the back of the chaos that has hit the crypto and blockchain ecosystems.
“We remain highly bullish on the growth of the digital asset ecosystem over the next few years. However, given the recent onset of the crypto winter – the flood of layoffs and revenue losses – we believe shorting positions such as Coinbase, Galaxy and Robinhood, along with those involved in the metaverse, like Meta and Roblox, will provide downside protection, or generate alpha in the current environment,” Jablonski says.
“In terms of what has happened in the crypto space, whether it’s the price of bitcoin coming down off 70,000 highs plus the collapse of FTX and the liquidity dry ups and now potential scandal and bankruptcy – lots of cryptocurrencies, digital assets and block chain stocks that were driving their performance from association with those products have taken a hit in the near term.”
IBIT was launched as a product that tracked the inverse performance of the entire eco-system for digital assets and blockchain stocks.
“We thought it would be hugely important to have a product out there for investors to have that view or to hedge their long-term portfolios.”
So far, the ETF has had no marketing or seeding and is only now just starting to get recognition. Jablonski believes that it will appeal to individuals or institutional clients who took on large positions in cryptocurrencies or related equities.
“It’s a polarising topic – there are hodlers and also those who think that crypo is over, so having products that give you both long and short exposure, can be useful to investors. Having a short fund essentially democratises investment tools most often utilised by large institutional holders, and gives retail investors, RIAs and others easy access to short the crypto eco system.
Defiance ETFs has been around since 2018/19, formed by people who had worked together in the ETF sector. “We are focused on thematic investing and with USD60 trillion in wealth from baby boomers who will transition that wealth to their children and grandchildren, they are looking for what are the next classic sectors of investing.”
The firm’s biggest product represents the future of communications, 5g. “This product has a huge tailwind, as you need to connect globally to achieve defence speed latency needs or devices that run data or for electric vehicles,” she says.
“Our goal is purity so our hydrogen ETF only has hydrogen companies in it. We are aiming to provide exposure to innovative sectors with transparency, but most importantly, purity.