Alejandro ArriecheThe first company to list a Bitcoin ETF in the United States – Grayscale – successfully launched a new vehicle available to European investors who would like to get exposure to companies within the up-and-coming crypto industry.
The Grayscale Future of Finance UCITS ETF (GFOF) will reportedly hit the trading floor tomorrow and will be listed on top exchanges in the United Kingdom, Germany, and Italy. This vehicle will mimic the performance of the Bloomberg Grayscale Future of Finance Index, which is comprised of top companies that currently participate in the crypto industry such as Block and Coinbase.
In regards to the listing, the Chief Executive Officer of Grayscale Investments, Michael Sonnenshein, stated: “With growing global demand from both institutional and individual investors for Grayscale products, we’re thrilled to be expanding our offering in Europe through the UCITS wrapper”.
He added: “Through GFOF UCITS ETF, European investors now have the opportunity to receive exposure to the companies that are pivotal to the evolution of the global financial system”.
The Undertakings Collective Investment in Transferable Securities, also known as UCITS, is a protocol through which funds listed within the European Union can be marketed to investors all across the region following a harmonized set of rules that regulate the promotion of these products and ensure compliance with the appropriate safe harbors to protect the investment community.
According to the company’s website, the expense ratio for GFOF currently stands at 0.7%. As of this morning, the fund’s portfolio is comprised of 21 different stocks. Robinhood Markets, PayPal, Block Inc, and Silvergate Capital Corp are among the fund’s top holdings by weight.
The launch of this ETF in Europe marks another milestone in Grayscale’s effort to become a leading player in the offering of exchange-traded products that provide exposure to the crypto ecosystem.
Grayscale was the first financial services firm to get a futures-backed Bitcoin (BTC) and Ethereum (ETH) ETF listed in the United States. The company is currently seeking to turn these same funds into spot vehicles rather than relying on derivatives to track the price of the underlying digital asset.
What Is the Scope and Reach of this New Grayscale ETF?
The Future of Finance ETF to be offered in Europe aims to provide exposure to publicly-listed companies that participate in the crypto ecosystem.
According to the prospectus, Grayscale estimates that around $6.8 trillion will be invested in digital transformation efforts from 2020 to 2023 while the size of the global blockchain technology market is estimated to surge to approximately $384 billion by the end of 2028.
Companies within the GFOF portfolio include platforms through which investors can buy and sell digital assets such as PayPal and Robinhood, businesses that are providing financing to companies within the ecosystem such as Silvergate Capital, and crypto mining firms like Argo Blockchain.
What is an Exchange-Traded Fund (ETF)?
Exchange-traded funds (ETFs) are vehicles through which investors can incorporate a certain type of asset into their portfolios. These funds typically focus on a certain industry, geography, or asset class and their shares can be traded as if they were a regular stock.
ETFs charge a management fee that is regularly below 1% and their performance typically mimics that of a benchmark. Depending on the fund’s strategy, they can be classified as passively or actively-managed. Passively managed vehicles aim to duplicate the performance of their benchmarks while actively managed funds aim to produce higher gains.
Through ETFs, investors can build highly diversified investment portfolios at a relatively low cost.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
This article was written for Business 2 Community by Alejandro Arrieche.
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