Two New Blockchain ETFs Launch, But Do Their Holdings Measure Up? Here’s What Our Weiss Ratings Data Shows …

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Investors are intently focused on Bitcoin and its cryptocurrency counterparts these days. That’s because they’ve delivered astonishing returns, while at the same time experiencing incredible volatility that raises questions about valuations. Many people are also enthusiastic about potential applications for the blockchain technology behind digital currencies.

We’ve tried to inform the marketplace as best as possible by introducing our Weiss Cryptocurrnecy Ratings. They’re designed to provide objective, conflict-of-interest-free guidance, and you can find out more details here.

But even if you don’t invest in cryptocurrencies directly, you may have seen the news that two firms just launched Exchange Traded Funds focused on the underlying blockchain technology. One is the Reality Shares Nasdaq NexGen Economy ETF (BLCN) and the other is the Amplify Transformational Data Sharing (BLOK). They both started trading on January 17.

So, are these ETFs worth your consideration? What kinds of companies do they own, and how do those companies measure up? That’s where our Weiss Ratings data can help!

Our Ratings model needs to incorporate several weeks of data before spitting out its initial ETF rankings. So, we DO NOT yet officially rate BLCN and BLOK. But the sponsors behind both ETFs DO publish their daily stockholdings, and we rate all the U.S. and Canadian stocks on those lists.

In fact, we rated 46 of the 59 holdings that BLCN listed and 46 of the 49 holdings that BLOK showed as of mid-January. Here is a list of every one of those companies, their ticker symbols, and their Weiss Ratings. Keep in mind that both ETFs owned many of the same stocks, so in those instances, I only listed each company once:

Data Date: 1/24/2018

Overall, 39 of the 67 unique stocks earned “BUY” ratings, while 22 garnered “HOLD” grades. Only six were relegated to “SELL” territory.

If you look the holdings list, you’ll see that these ETFs do invest in some companies that are almost exclusively focused on blockchain and cryptocurrency businesses, like Canadian blockchain infrastructure provider Hive Blockchain Technologies (HIVE.V, Rated “C”). But they also own companies that have many, many other business lines, including Cisco Systems (CSCO, Rated “B+”), Goldman Sachs Group (GS, Rated “B-”), and Qualcomm (QCOM, Rated “C”).

That just goes to show that the definition of “companies around the world and across sectors developing the underlying technologies behind blockchain innovation,” which is what BLCN’s literature says it targets, is broad enough to include many traditional tech stocks.

Even the occasional company that would seem to have nothing to do with cryptocurrencies, like Eastman Kodak (KODK, Rated “D”), made the cut. That’s because the 130-year-old camera and film company recently said it was rolling out a “KodakCoin” – a currency designed to help photographers earn money from licensing their work online.

So, what’s the bottom line for investors here? BLCN and BLOK do own a nice chunk of BUY-rated companies, and few SELL-rated ones. But there are a plethora of technology ETFs on the market that own many of the same names that are in their portfolios, and that also have lower expense ratios than the 0.7% for BLOK and 0.68% for BLCN.

A quick Weiss Ratings ETF Screener I ran turned up 26 BUY-rated, lower-cost ETFs focused on the technology sector. Their 1-year total returns ranged from around 12% to as much as 54.7%, so these weren’t slouches in the performance department, either!

Make sure you do your homework when deciding if you’re going to invest in the blockchain/cryptocurrency arena directly … or tech in general!

Until next time,

Mike

Mike Larson is a Senior Analyst for Weiss Ratings. A graduate of Boston University, Mike Larson formerly worked at Bankrate.com and Bloomberg News, and is regularly featured on CNBC, CNN, Fox Business News and Bloomberg Television as well as many national radio programs. Due to the astonishing accuracy of his forecasts and warnings, Mike Larson is often quoted by the Washington Post, Chicago Tribune, Associated Press, Reuters, CNNMoney and many others.