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Independent investment management firm Invesco has partnered with digital asset investment firm Elwood Asset Management to launch a blockchain exchange-traded fund (ETF) on the London Stock Exchange. The goal of the ETF is to invest in constituents of the Elwood Blockchain Global Equity Index and, in this way, contribute to the performance of the index as a whole.
The ETF, dubbed the Invesco Elwood Global Blockchain UCITS ETF, was first listed on the London Stock exchange on Friday, March 8, and, according to an article in the Financial Times, started trading today, March 11. The blockchain ETF is issuing 500,000 shares with a net asset value of $20 million, meaning individual shares are valued at $40. (They carry an annual management fee of 0.65 percent.)
According to the Elwood press release, the ETF will at first be used to invest in the 48 companies listed on the Elwood Blockchain Global Equity Index. This index includes major players such as Amazon, General Motors, and Apple. The index is broken up in percentages based on industry, with IT companies making up 46 percent of the list, financial services firms comprising 23 percent, communications companies responsible for 9 percent, and 8 percent operating in "both the materials and consumer discretionary sectors." US-based companies will receive 39 percent of funds obtained through this new ETF, while 29 percent will go to Japanese companies on the index, and Taiwanese firms will be allocated 12 percent.
Kevin Beardsley, Elwood's head of business development, explained why the two companies are initially focusing on companies listed on the index:
"The majority of the index is currently allocated to companies where the value attributable specifically to blockchain technology is either in the 'developing' or 'potential' phase. These are companies with assets that are well-positioned to capitalize on the emerging opportunities for blockchain. Over time, however, we would expect the balance to shift naturally to companies with more significant direct exposure to blockchain-related earnings as the technology becomes more ubiquitous."
Many of the companies listed on the Elwood index are very active in the blockchain space. For instance, in November 2018, Amazon announced the development of two blockchain services: the Amazon Quantum Ledger Database to build applications that record "transactions made by multiple parties" and the Amazon Managed Blockchain for businesses that do not want to build their own DLT platforms.