As the world moves to adopt blockchain, you can discover a new opportunity for your portfolio. This is in the form of Invesco India â€“ Invesco CoinShares Global Blockchain ETF Fund of Fund, an open ended fund of fund scheme investing in Invesco CoinShares Global Blockchain UCITS ETF. Here is all you wanted to know about this equity mutual fund that aims to gain from the crypto economy.
About the fund
Invesco India-Invesco CoinShares Global Blockchain ETF Fund Of Fund aims to generate returns by investing in units of Invesco CoinShares Global Blockchain UCITS ETF ,an overseas ETF.
The underlying fund (ETF), with USD 1 billion assets, has a diversified portfolio. In terms of market cap split, Large cap allocation is 47%, Mid Cap 28% and Small Cap 26%. In terms of geographical exposure, the United States 29%, Japan 26%, Canada 13%, South Korea 9% and Taiwan 8%. The top 5 holdings are Coinbase Global Inc, GMO Internet Inc, Kakao Corp, TSMC ( Taiwan) and SBI Holdings (Japan). The next 5 holdings are Monex Group Inc, Hive Blockchain Technologies Ltd, Bitfarms Ltd, Bit Digital Inc and MicroStrategy Inc.
For investors, the NFO provides a liquid way to gain exposure to blockchain technology. Unlike cryptos, a mutual fund focussed on crypto stocks looks at a company’s real earnings potential.
Invesco India-Invesco CoinShares Global Blockchain ETF Fund Of Fund is benchmarked to CoinShares Blockchain Global Equity Index.
The underlying ETF has seen good performance in INR terms. Its 1 year return is 96.0% and 2 year return is 71.9%. Since inception in March-2019, the underying ETF has given 56.8% gain.
For Invesco India-Invesco CoinShares Global Blockchain ETF Fund Of Fund, exit load is 0.50% if redeemed/switched out on or before 1 month from the date of allotment. There is no exit load if redeemed/switched out after 1 month from the date of allotment.
Fund managers are Neelesh Dhamnaskar and Krishna Cheemalapati (for debt investments).
What is blockchain
As the name suggests, it is a chain of blocks. Each block contains information; it can be any information, and you can have as many blocks as needed. Each block is sequentially connected using codes (cryptography) to form a chain. Most people think cryptocurrency like Bitcoin, and blockchain are similar. Blockchain is not bitcoin; it is the underlying technology that enables bitcoin. Think of an engine which powers both a car or a tractor.
In other words, blockchain is a digital ledger system that facilitates the process of recording transactions and tracking assets in a network. An asset can be tangible (a house, car, cash, land, etc.) or intangible (intellectual property, patents, copyrights, branding, etc.). Virtually, anything of value can be tracked from medical records to food supply chain transactions using blockchain technology.
While blockchain is still in its infancy, the continued acceleration and depth of its development points to a positive future. Investors can look to benefit from the growth of this industry by getting financial exposure to the blockchain ecosystem or its sub segments.
Why invest in the NFO
Firstly, blockchain exposure will help to benefit from continued acceleration of blockchain adoption. Second, the NFO provides an easy way to gain exposure to various companies that participate or have the potential to participate in the blockchain ecosystem. Three, the fund enables investors to invest simply in both established and innovative companies operating in the field of blockchain technology. Four, investment in countries other than the home country can help to reduce the risk associated with investment in a single country, thus giving true portfolio diversification. Five, this is an opportunity to invest in global companies/businesses, which are not available in India for investment.