A new blockchain ETF will begin trading Thursday on the Toronto Stock Exchange, offering exposure to the infrastructure behind the disruptive technology.
The Horizons Blockchain Technology and Hardware Index ETF joins similar exchange-traded funds from Harvest Portfolio Group Inc. and Evolve Funds Group Inc., both of which have lost more than 20 per cent since they launched this year. The Horizons fund will differentiate itself by focusing on hardware and services, said Steve Hawkins, co-chief executive officer of Horizons ETFs Management Canada Inc.
The ETF’s holdings include companies developing blockchain-related applications, like Hive Blockchain Technologies Ltd., semiconductor firms like Nvidia Corp., and service providers like Digital Realty Trust Inc.
“We don’t know which individual blockchain companies are going to work, we have no idea what the extent of the blockchain applications will be, but we do know people will have to invest in the infrastructure to build out blockchain,” Hawkins said in a phone interview. “It’s going to be these ancillary services to the blockchain technology where the winners are going to be at the end of the day.”
The ETF, using the symbol BKCH, is based on the Solactive Blockchain Technology and Hardware Index, which also includes major players like Intel Corp., Advanced Micro Devices Inc. and Micron Technology Inc.
“We don’t want to be investing in a $20 million market cap company at this stage, there’s just way too much risk to that,” Hawkins said. “Investors need to be investing in the well-established global infrastructure to blockchain, not necessarily taking risks on the startup blockchain development companies.”
The Blockchain Technologies ETF from Harvest Portfolios has lost 25 per cent since it began trading in February, while the actively managed Evolve Blockchain ETF has fallen 20 per cent since March 6.