A new artificial intelligence-powered blockchain ETF will begin trading on the Toronto Stock Exchange on Thursday, offering exposure to the disruptive technology being woven into everything from financial services to healthcare.
The Coincapital STOXX Blockchain Patents Innovation Index Fund (LDGR) is based on the iSTOXX Yewno Developed Markets Blockchain Index. An artificial intelligence algorithm cherrypicks companies for the fund that invest in blockchain technology and research by combing through patent and intellectual property filings.
“We looked at all the previous blockchain funds out there. We came to the realization that actually having companies that are investing in the research and development and patents is resoundingly the way to start this,” Coincaptial CEO Lewis Bateman told Yahoo Canada Finance on Wednesday.
The ETF debuts with a basket of about 37 companies, according to Bateman. Top holdings include Mastercard Inc. (MA) (8.78 per cent), technology and industrial firm Johnson Controls International (JCI) (8.43 per cent), and Royal Bank (RY) (8.38 per cent).
Records show Mastercard and Royal Bank are pursuing blockchain-related patents. Mastercard is aiming modernize business-to-business transactions. Royal Bank is interested using blockchain technology to improve its credit rating system.
A blockchain ETF offering from Coin Capital Investment Management is fitting, given its parent company’s expertise in the cryptocurrency market. Toronto-based Coinsquare is known for its trading platform for Bitcoin, Ethereum and other digital currencies.
The new investment vehicle for the ledger-like technology that underpins the notoriously volatile cryptocurrencies comes as investor appetite for Bitcoin, and its peers, continues to wane. The price of Bitcoin has plunged more than 60 per cent since reaching an all-time high of nearly $20,000 in December.
New blockchain ETFs have not had an easy run either. Harvest Portfolio Group Inc.’s Blockchain Technologies ETF (HBLK) has plunged more than 30 per cent since its launch in late January. Evolve Funds Group Inc.’s blockchain ETF (LINK) has shed more over 20 per cent since it hit the market in March.
“The construction itself is going to differentiate between us and their funds,” said Bateman. “We could have advanced our launch earlier, but we took the time and effort in the buildout, and not just marched to the marketplace with a thematic opportunity.”
Coincapital will also launch its STOXX B.R.AI.N Index Fund ETF when its executives ring the ceremonial TSX opening bell at the start of Thursday’s trading session. The fund is designed to tap into four technology-based “megatrends” identified by the company – biotechnology, robotics, artificial intelligence and nanotechnology (which spell out “brain” when listed in that order).
“These sub-sectors are where we think the tremendous growth is going to happen over the next three, five and 10 years,” Bateman said. “There is really a nice correlation between all four industries.”