Invesco launches blockchain ETF

By Roger Baird on Tuesday 12 March 2019

Savings and Investment

The US money manager said the ‘potential for blockchain to drive real earnings is huge’.

Asset management giant Invesco has launched a blockchain exchange-traded fund (ETF), highlighting growing investor interest in the technology behind cryptocurrencies.

The London-listed fund, picked in conjunction with London-based technology investment house Elwood Asset Management, is called the Invesco Elwood Global Blockchain ETF.

It is initially expected to hold around 50 firms linked to blockchain technology, which is little over a decade old.

Chip manufacturer Intel, semiconductor producer Advanced Micro Devices and an exchange supporting Bitcoin futures, CME Group, are US firms in the ETF, as is Asian manufacturer Taiwan Semiconductor.

Blockchains are distributed ledgers that create a transparent, unalterable, traceable record of transactions that are updated in real-time.

The technology was first used to trade cryptocurrencies such as Bitcoin and Ethereum, but in recent years financial services firms have begun testing this technology on a range of transactions such as cross-border payments, share trading and syndicated lending.

Invesco head of EMEA ETF equity product management Chris Mellor (pictured) said, “The potential for blockchain to drive real earnings is huge, but it is often hidden within companies involved in other areas. This ETF offers investors access to companies with real earnings now, but with the added potential of blockchain-related earnings not reflected in their share prices.”

US firm Invesco said the three largest sector allocations in the index are information technology, which accounts for 46 per cent of the fund, financials, 23 per cent, and communication services, which takes up nine per cent.

It added the three countries with the greatest concentration of firms within their borders are the US, Japan and Taiwan.  

Elwood head of business development Kevin Beardsley said: “The majority of the index is currently allocated to companies where the value attributable specifically to blockchain technology is either in the ‘developing’ or ‘potential’ phase. These are companies with assets that are well-positioned to capitalise on the emerging opportunities for blockchain."  

The financial services arm of the blockchain market is forecast to rocket to $462bn over the next decade, according to a report by economics research group IHS Markit last month.

The survey, called Blockchain in Finance Report 2019, said the financial services industry is attracted to potential cost savings the technology offers.

It said: “Because the financial sector includes markets of significant value, even a small percentage of cost savings and efficiency gains can lead to significant business value for companies and industries that introduce blockchain technology.”

The survey said the value of blockchain in the financial sector was $1.9bn in 2017.


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