There still isn’t a Bitcoin exchange traded fund listed on US exchanges, but that could soon change. However, some equities offer crypto exposure – a concept offered in basket form with the newly minted VanEck Vectors Digital Transformation ETF (DAPP).
DAPP, which debuted earlier this month, tracks the MVIS Global Digital Assets Equity Index. The benchmark “is intended to track the performance of companies that are participating in the digital assets economies,” according to VanEck.
Digital assets aren’t held by DAPP’s index, but the benchmark’s components include companies engaged in mining, hardware, exchanges, holding and trading, payment gateways, patents and services, and banking.
“That methodology is important at a time when more companies are viewing Bitcoin as an asset worthy of inclusion on corporate balance sheets,” according to Nasdaq. “For example, MicroStrategy (MSTR), Square (SQ) and Tesla (TSLA) combine to hold $7.6 billion worth of Bitcoin on their balance sheets. DAPP taps into that theme by allocating 9.11% of its weight to Square and almost 5% to MicroStrategy, respectively, – two of the largest allocations to those names among all ETFs.”
DAPP: A Credible Alternative for Crypto Exposure
DAPP, a thematic fund, could be the beneficiary of good timing as it arrives at a time of rapidly growing crypto interest.
“The opportunity set of publicly traded, pure-play digital transformation companies is still young, but has grown in both size and revenues over the last few years,” according to VanEck research. “Despite underlying volatility in digital assets themselves, many publicly traded companies are investing heavily in new business lines to position themselves favorably as digital asset usage and adoption continues to accelerate.”
Investors are already expressing their trust in DAPP. The ETF is just two weeks old and already has about $18 million in assets under management. That’s an impressive start for any rookie ETF, particularly one addressing a still new investment niche.
“The digital transformation is underway. In recent years, digital assets have started to mature, evidenced by increased global adoption by both retail and institutional investors,” adds VanEck. “Against this backdrop, we believe that companies involved in the digital transformation of the global economy represents a long-term structural growth opportunity that is becoming more and more accessible to investors.”
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