Invesco is launching an exchange traded fund (ETF) designed to target companies with potential to generate real earnings from blockchain technology.
The Invesco Elwood Global Blockchain Ucits ETF has been developed in partnership with Elwood Asset Management, an investment firm specialising in providing institutional investors with exposure to digital assets and blockchain technology.
A blockchain is a ledger that enables the transfer of assets to create a transparent, unalterable, traceable and permanent record of all transactions involving those particular assets. Cryptocurrencies were the first assets to use the blockchain technology, but assets can also be physical, or they could be medical records, legal contracts or any other information that flows between multiple parties.
Gary Buxton, head of EMEA ETFs at Invesco, said: “We believe the potential for blockchain technology to disrupt the status quo of companies in virtually every industry makes for a strong long-term investment case.”
Beyond cryptocurrencies
Bin Ren, CEO of Elwood, said: “Blockchain has been around for a decade, but many people still see it just as the technology behind cryptocurrencies. The true potential, however, may extend far beyond that. We are beginning to see the technology being used by financial services companies in particular, but we expect greater application of blockchain technology across a wide range of industries.”
The ETF aims to deliver the performance of the Elwood Blockchain Global Equity Index by physically investing in the index constituents. The index offers exposure to global companies in developed and emerging markets that participate or have the potential to participate in the blockchain ecosystem. It is designed to evolve with the potential growth of blockchain technology.
The majority of the Elwood index is allocated to companies where the value attributable specifically to blockchain technology is either in the ‘developing’ or ‘potential’ phase.
In terms of the largest sector allocations, the index currently has 46% in information technology, 23% in financials, 9% in communication services and 8% in both the materials and consumer discretionary sectors. The three largest geographical allocations are to the US (39%), Japan (29%) and Taiwan (12%).
The index is calculated for Elwood Asset Management by Solactive AG, a globally recognised index provider with expertise in tailor-made indices. The index is reviewed and rebalanced quarterly.
