An ETF Levered To The Cryptocurrency Trade

The intersection of cryptocurrencies and exchange traded products, at least in the U.S., remains unrealized. Several exchange traded funds issuers have filed plans with the Securities and Exchange Commission for bitcoin funds, but some of those plans have recently been scuttled due in part to bitcoin futures not yet being available.

There are some ETFs with bitcoin exposure and, not surprisingly, those funds are surging. A name to remember from this group is the ARK Web x.0 ETF ARKW.

Actively managed, the ARK Web x.0 ETF's holdings include a mix of stocks classified as technology names and some that dwell in the consumer discretionary sector, including Amazon.com Inc. AMZN and Netflix, Inc. NFLX.

ARKW is up 65.3 percent year-to-date. Not only does that make it one of the best-performing non-leveraged ETFs this year, ARKW's 2017 showing exceeds that of the largest technology and biggest Internet ETF even when those funds' year-to-date returns are combined.

Back To Bitcoin

As noted earlier, ARKW does feature direct and indirect exposure to bitcoin, the well-known, high-flying cryptocurrency. The Bitcoin Investment Trust GBTC is ARKW's second-largest holding behind Amazon at a weight of 5.5 percent.

The Bitcoin Investment Trust “enables investors to gain exposure to the price movement of bitcoin through a traditional investment vehicle, without the challenges of buying, storing, and safekeeping bitcoins,” according to its issuer.

ARKW's bitcoin exposure doesn't end there. NVIDIA Corporation NVDA is the ETF's sixth-largest holding at a weight of 4.2 percent. One of the primary reasons Nvidia is up more than 79 percent this year, making it one of the best-performing semiconductor stocks, is the company's strong footprint in the market for cryptocurrency chips.

The Bitcoin Catalyst

ARKW "appreciated significantly, in large part because of its exposure to cryptoassets through the Bitcoin Investment Trust and NVIDIA’s new crypto mining chip. NVIDIA’s position in the market for deep learning chips also played an important role,” according to ARK Investment Management.

ARKW, which recently turned three years old, can hold 30 to 50 US-listed stocks. The weighted average market value of the ETF's current roster is $137 billion. Twenty-three percent of ARKW's holdings are cybersecurity and cloud computing companies.

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