XBTF is an actively managed fund that invests in cash-settled, standardized bitcoin futures contracts while having added potential tax efficiency for investors because it is structured as a C-Corp.
The ETF seeks to invest mainly in bitcoin futures that are listed on the CME, a market that has experienced tremendous growth in the last three years. Average daily open interest has increased from $77 million in the first quarter of 2018 to nearly $1.5 billion in the third quarter of 2021, and continues to grow.
“Cost and tax treatment are two essential considerations for investors, and we have made both front and center in the design of XBTF. Investors deserve lower cost, transparent, regulated bitcoin exposures, and we’re pleased to be leading that charge with the launch of XBTF and all of our ongoing efforts in the bitcoin and digital assets space,” said Kyle DaCruz, director, digital asset product with VanEck, in the press release.
The fund does not seek leveraged returns on bitcoin, but because it does seek to invest in bitcoin futures so that the value of the bitcoin to which the fund has economic exposure to is equal to 100% of the total assets of the fund, the fund’s exposure can exceed 100% of the net assets and therefore be leveraged. This means that the NAV changes can be larger than the changes in the value of bitcoin.
XBTF invests in “front month” bitcoin futures and will roll to the next nearby contracts before the current ones expire. In order to maintain liquidity and provide collateral, the fund will carry significant amounts of fixed income investments and cash in addition to the bitcoin futures.
“While a ‘physically backed’ bitcoin ETF remains a key goal, we are very pleased to be providing investors with this important tool as they build their digital asset portfolios,” said DaCruz.
XBTF has an expense ratio of 0.65% and does not invest in bitcoin directly.
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