Blockchain technology applications go well beyond cryptocurrency. With the potential to disrupt capital markets, cloud computing and the clean energy industry, blockchain is expected to lead technological innovations in the coming months. Consequently, blockchain ETFs Siren Nasdaq NexGen Economy (BLCN) and First Trust Indxx Innovative Transaction & Process (LEGR) are expected to deliver solid returns this year. So, let’s take a closer look at these funds.
Blockchain technology, which was designed initially to facilitate the storage and transfer of cryptocurrencies, is revolutionizing virtually every industry. The decentralized database structure is being widely adopted in the banking and financial services industry and is viewed as a game changer in the real estate, advertising, and cloud computing industries. Cryptocurrencies are increasingly being accepted as a medium of exchange worldwide, with several multi-billion-dollar companies now accepting payments in Bitcoins.
The rising popularity of non-fungible tokens (NFTs) is also contributing to the decentralized technology’s growth. NFTs are digital assets that represent a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate and even digital sneakers. The global blockchain technology market is expected to grow at a CAGR of 43% over the next six years to hit $30.70 billion by 2027.
As companies focus on innovation to boost profitability in the wake of pandemic-driven losses, blockchain technology development companies are expected to witness a significant uptick in demand over the near term. Given this backdrop, we think blockchain ETFs, such as Siren Nasdaq NexGen Economy ETF (BLCN) and First Trust Indxx Innovative Transaction & Process ETF (LEGR) should prove to be wise investment bets now.
Siren Nasdaq NexGen Economy ETF (BLCN)
BLCN invests in some of the biggest blockchain development companies around the world. The passively managed ETF closely tracks the Siren NASDAQ Blockchain Economy Index. BLCN issues Blockchain Scores to companies operating in this industry based on their material resources dedicated towards research and development to expand the use of blockchain technology. The ETF invests in the top 50-100 companies with the highest scores, with a higher weighting accorded to the top scoring companies.
With $316 million assets under management (AUM), BCLN’s top holdings include SAP SE Sponsored ADR (SAP), International Business Machines Corporation (IBM) and Galaxy Digital Holdings Limited (GLXY). The fund 18.39% holdings turnover rate.
BLCN has an MSCI ESG Fund Rating of ‘A’, which indicates strong management, and appropriate engagement of social and environmental responsibilities. The ETF ranks in the 85th percentile of all funds rated by MSCI ESG Fund.
BLCN has a 0.68% expense ratio of 0.68%, which is higher than the 0.5% category average. The ETF has gained 109.5% over the past year, and 19.4% year-to-date. It pays $0.13 in dividends annually, yielding 0.26% on its current price. BLCN’s four-year average dividend yield is 0.89%.
BLCN’s POWR Ratings reflect this promising outlook. It has an overall B rating, which translates to Buy in our proprietary rating system. It has an A for Trade Grade, and B for Buy & Hold Grade. Of the 110 ETFs in the B-rated Technology Equities ETFs group, BLCN is ranked #65.
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
LEGR invests in companies that operate as Active Users, Active Enablers or Active Explorers in blockchain technology. It is an equally weighted index that comprises companies that have substantial exposure to blockchain technology. Established in 2018, LEGR closely tracks the Indxx Blockchain Index, investing in large-cap blended equities.
LEGR has $89.70 million in AUM. Its major holdings are NVIDIA Corporation (NVDA), IBM and Oracle Corporation (ORCL). LEGR has a 25% holdings turnover rate. The ETF has an ‘AA” MSCI ESG Fund Rating, which represents sound management and focus on social and environmental issues. LEGR has a 97.18 percentile rank in its peer group, and a 94.77 global percentile rank in the comprehensive group that contains all ETFs rated by MSCI ESG Fund.
LEGR has a 0.65% expense ratio, which is higher than the 0.5% category average. It pays $0.35 as dividends annually, yielding 0.85% at the prevailing share price. LEGR’s four-year average dividend yield stands at 1.27%. The ETF has gained 57.7% over the past year, and 10.8% year-to-date.
It’s no surprise that LEGR has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. It has an A for Trade Grade, Buy & Hold Grade, and Peer Grade. LEGR is ranked #36 in the Technology Equities ETFs group.
BLCN shares were trading at $48.75 per share on Tuesday morning, up $0.09 (+0.18%). Year-to-date, BLCN has gained 19.72%, versus a 11.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.