As investors look at the expansion of the digital economy, they can consider an exchange traded fund investment strategy designed to capitalize on the intersection of digital assets, technology, and finance.
In the recent webcast, The Digital Economy Is Here. Is Your Portfolio Ready?, David LaValle, managing director, global head of ETFs, Grayscale Investments, highlighted the opportunity in thematic investments to help capture a forward-looking investment approach that seeks to embrace and introduce exposure to the structural changes that are happening in the world.
“Thematic investing can help position portfolios to capture the investment outcomes and potential benefits of disruptive technologies, changing consumer behaviors, or developments across traditional sectors and industries,” LaValle said.
Specifically, LaValle highlighted the so-called “Future of Finance” category, which is the evolution of the modern financial system as we know it. "The Future of Finance is reshaping all aspects of financial services and is being driven by innovative companies, institutions, and infrastructure," LaValle said.
LaValle explained that companies and technologies that are shaping the “Future of Finance” are forming a digital economy that is playing an integral role in evolving financial system. These pillars represent the confluence of financial services, technology, and digital assets.
When it comes to financial foundations, investors have to account for the people, the players, and the institutions that are part of this ecosystem. Companies enable institutional involvement in the digital economy and help drive investments in order to advance the future of finance. Exchanges are the on and off ramps to the digital economy. Lastly, payment platforms are access points and gateways for individuals, businesses, and institutions to transact.
Technology solutions act as picks and the shovels in the digital age. These are the companies delivering the products and services that support the broader digital economy ecosystem.
Additionally, the digital asset infrastructure acts as the roads, the bridges, and the buildings in the new economy. Miners are one of the most integral components of the digital asset ecosystem. Miners secure, record, and store data on the blockchain. The basic hardware are the physical support for the digital world. Lastly, energy and resource management is comprised of companies providing functional support for efficiency across the digital economy.
To help investors access the whole value chain in the future of finance, Grayscale Investments, the biggest global digital currency asset manager, recently launched the Grayscale Future of Finance ETF (GFOF). The ETF focuses on both the companies and the technologies driving the financial industry forward through innovation.
GFOF tracks the Bloomberg Grayscale Future of Finance Index, an index compiled by Bloomberg Intelligence analysts, and is centered on three pillars that Grayscale believes capture the drivers for the future of global finance. The company believes that the digital economy is going to be a major driver for the development and growth of the global economy going forward, and GFOF works to capture this shift.
Companies within the index fall under one of three pillars: the financial foundations, which includes exchanges, asset managers, brokerages, and wealth managers that utilize the digital economy; technology solutions, which includes companies creating and providing the technology used within the digital economy; and digital asset infrastructure, which encompasses digital asset miners, energy management, and the activities that underpin and power the digital ecosystem as a whole.
Specifically, GFOF provides exposure to mining, exchanges, payment platforms, and asset management. These sub-themes can be broken down to traditional industries like software, IT services, diversified financial services, consumer finance, capital markets, banks, and technology hardware companies.
Financial advisors who are interested in learning more about the digital economy can watch the webcast here on demand.