A Third Blockchain ETF Debuts

Issuers of exchange-traded funds aren't having any luck when it comes to getting a bitcoin ETF to market. In lieu of ETFs tied to cryptocurrencies, some issuers are turning to blockchain funds.

First Trust on Thursday launched the First Trust Indxx Innovative Transaction & Process ETF LEGR. The First Trust Indxx Innovative Transaction & Process ETF is the third blockchain ETF to come market. LEGR follows last week's debuts of the Amplify Transformational Data Sharing ETF BLOK and the Reality Shares Nasdaq Blockchain Economy ETF BLCN.

BLCN and BLOK have $68.8 million and $163.8 million, respectively, in assets under management. LEGR, the new First Trust ETF, tracks the Indxx Blockchain.

More About LEGR's Index

LEGR's index “racks the performance of exchange-listed companies across the globe that are either actively using, investing in, developing, or have products that are poised to benefit from a new technology known as blockchain,” First Trust said in a statement. “The index seeks to include only companies that have devoted material resources to the use of blockchain technologies.&rdquo

LEGR's components are split into three categories: active enablers, active users, and active explorers. Active users are defined as “actively developing blockchain technology products or systems for their own internal use and for the sale and support of other companies; companies that are direct service providers for blockchain technology; or, companies that have business models that rely on delivering products or services that use blockchain technology,” according to First Trust.

Active users are companies using blockchain technologies developed or supported by companies that are considered active enablers. Companies in the third category, known as active explorers, are those that have publicly disclosed that they are considering the use of blockchain technologies in their businesses but do not currently have direct blockchain exposure.

Familiar Names

LEGR's underlying index has 67 components. Familiar names in the benchmark include NVIDIA Corporation NVDA, Micron Technology MU, Intel Corporation INTC and Microsoft Corporation MSFT.

“International Data Corporation's (IDC) Worldwide Semiannual Blockchain Spending Guide reported that global spending on blockchain solutions is forecast to reach $2.1 billion in 2018, more than double the $945 million spent in 2017,” First Trust said. “It is projecting a five-year compound annual growth rate of 81.2 percent through 2021. The U.S. is expected to account for 40 percent of worldwide spending over the period, followed by Western Europe and China.”

LEGR charges 0.65 percent per year, or $65 on a $10,000 investment.

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