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A New Blockchain ETF Focuses On China

June 21, 2018 9:28 am
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Several exchange traded funds dedicated to the blockchain investment theme have come to market this year, but all are heavily focused on domestic or developed market equities.

That changed Wednesday with the debut of the Reality Shares Nasdaq NexGen Economy China ETF (NASDAQ:BCNA), the first U.S.-listed ETF focused on blockchain investment opportunities in China.

What Happened

The Reality Shares Nasdaq NexGen Economy China ETF is the second blockchain ETF from San Diego-based Reality Shares. Earlier this year, the firm introduced the Reality Shares Nasdaq NexGen Economy ETF (NASDAQ:BLCN).

As of June 19, BLCN had $128.2 million in assets under management, making it one of the largest blockchain ETFs to come to market.

The new China blockchain ETF tracks the Reality Shares Nasdaq Blockchain China Index. That benchmark “seeks to identify and invest in Chinese companies committing material resources to develop and implement blockchain technology,” according to Reality Shares.

Why It's Important

As is the case in the U.S., China is a potentially massive blockchain market.

“Chinese companies represent some of the largest proponents of blockchain technology and have committed vast material resources to developing, researching, supporting, innovating, and utilizing blockchain technology,” according to Reality Shares.

BCNA debuted with 31 holdings. Over 91 percent of the new ETF is allocated to the financial services and technology sectors. Consumer discretionary names account for 8.7 percent.

BCNA's top 10 holdings combine for almost 32 percent of the fund's weight. Well-known names in that group include Alibaba Group Holding Ltd. (NYSE:BABA) and Baidu.com Inc. (NASDAQ:BIDU).

What's Next

BCNA holdings are evaluated based on factors such as their roles in blockchain ecosystem, blockchain product stage, blockchain economic impact, Blockchain Institute membership, research and development expenditure, company filings and innovation, according to Reality Shares.

Last year, no country had more blockchain patent filings than China. BCNA's annual expense ratio is 0.78 percent, or $78 on a $10,000 investment.

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