A hot topic right now in the US and Australian markets is the emergence of exchange-traded funds (ETFs) that are investing in cryptocurrencies and blockchain technologies.
That's why there is considerable interest in ETF Securities' new product launched this month, named ETFS Fintech & Blockchain ETF (Chi-X: FTEC).
The ETF aims to track the performance of the Indxx Developed Markets Fintech & DeFi Index.
That index contains 75 fintechs from developed nations, with a subset involved in blockchain and decentralised finance (DeFi) concepts.
"FTEC uses a full-replication strategy to track the index, meaning that it holds all the shares that make up the index," states the ETF Securities' website.
"Companies are equally weighted, meaning at each rebalance the companies are bought in an equal proportion."
Where do I buy shares in FTEC?
Unfortunately, FTEC shares are not traded on the ASX. They were floated on the rival exchange Chi-X, which some broking platforms have access to.
ETF Securities has not answered The Motley Fool's enquiry about why the ETF is not listed on the ASX.
Historically, the ASX has been wary of shares involved in blockchain or cryptocurrencies, fearing that they expose retail investors to speculative risk.
A famous recent example is Animoca Brands, which deals with non-fungible tokens (NFTs) and develops video games.
The Hong Kong company was listed on the ASX but it was kicked out in March 2020 when it had a market capitalisation of $80 million.
By June this year, Animoca was valued at $1.29 billion as a private company after a $100 million capital raising round.
There is now much industry talk about ASX allowing its first blockchain-related ETF to float.
The BetaShares Crypto Innovators ETF is "coming soon" to the ASX but the company has not yet indicated when.
What are the businesses FTEC invests in?
The majority of holdings for FTEC are overseas shares. In fact, just 1.3% of the fund is held in Australian companies.
American shares account for 62.3% of the ETF value, and they unsurprisingly monopolise the 5 biggest holdings:
- Upstart Holdings Inc (NASDAQ: UPST): 3.2%
- Affirm Holdings Inc (NASDAQ: AFRM): 2.8%
- LendingClub Corp (NYSE: LC): 2.2%
- Marathon Digital Holdings Inc (NASDAQ: MARA): 2.0%
- Bill.com Holdings Inc (NYSE: BILL): 2.0%
