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AI Powers Blockchain ETF

Updated: Sep 27, 2018

| AI + T |


A recent artificial intelligence-powered blockchain ETF (Exchange Traded Fund) began trading on the Toronto Stock Exchange last week, offering exposure to the disruptive technology being intertwined into everything from healthcare to financial services.


The Coin Capital STOXX Blockchain Patents Innovation Index Fund (LDGR) is based on the iSTOXX Yewno Developed Markets Blockchain Index. An artificial intelligence algorithm selects companies for the fund that invest in blockchain technology and research by examining through patent and intellectual property filings.


Lewis Bateman Coin Capital CEO expressed on Yahoo Canada Finance: “We looked at all the previous blockchain funds out there. We came to the realization that actually having companies that are investing in the research and development and patents is resoundingly the way to start this.”


According to Bateman, The ETF debuts with a basket of about 37 companies. Top holdings include Mastercard Inc. (8.78 per cent), technology and industrial firm Johnson Controls International (8.43 per cent), and Royal Bank (8.38 per cent).


Current records demonstrate Mastercard and Royal Bank are pursuing blockchain-related patents. Mastercard is aiming to modernize business-to-business transactions. While Royal Bank is interested in using blockchain technology to improve its credit rating system.

A blockchain ETF offering from Coin Capital Investment Management is fitting, given its parent company’s expertise in the digital currency market. Toronto-based Coinsquare is known for its trading platform for Bitcoin, Ethereum and other digital currencies.


The new investment vehicle for the ledger-like technology that underpins the notoriously volatile digital currencies comes as investor appetite for Bitcoin. The price of Bitcoin has plunged more than 50 per cent since reaching an all-time high of nearly $20,000 last December.


New blockchain ETFs have not had an easy run either. Harvest Portfolio Group Inc.’s Blockchain Technologies ETF (HBLK) has plunged more than 30 per cent since its launch in late January. Evolve Funds Group Inc.’s blockchain ETF (LINK) has shed more over 20 per cent since it hit the market in March.


“The construction itself is going to differentiate between us and their funds,” Bateman expressed. “We could have advanced our launch earlier, but we took the time and effort in the buildout, and not just marched to the marketplace with a thematic opportunity.”


Coin Capital has also launched its STOXX B.R.AI.N Index Fund ETF when its executives ring the ceremonial TSX opening bell at the start of last Thursday’s trading session. The fund is designed to tap into four technology “megatrends” identified by the company: biotechnology, robotics, artificial intelligence and nanotechnology (spelling out “brain” when listed in that order).


“These sub-sectors are where we think the tremendous growth is going to happen over the next three, five and 10 years,” Bateman suggested. “There is really a nice correlation between all four industries.”


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