As the blockchain industry continues to grow rapidly, investing in blockchain ETFs like BLOK has become increasingly popular. BLOK is an actively managed ETF that provides exposure to companies involved in developing and utilizing blockchain technologies. With over $1 billion in assets, BLOK is one of the largest blockchain ETFs available. This article analyzes the structure, holdings, performance and risks of investing in BLOK to help investors make informed decisions.
BLOK overview – actively managed blockchain ETF
BLOK is an actively managed ETF launched by Amplify ETFs in 2018. It aims to provide investors with total return by investing at least 80% of its assets in securities of companies actively involved in the development and utilization of blockchain technologies. As an actively managed fund, its holdings are chosen by portfolio managers rather than tracking an index. BLOK has over 60 stocks in its portfolio with total net assets of around $1 billion as of May 2022. Its top 10 holdings make up 40% of the fund.
BLOK top holdings – diversified blockchain exposure
As an actively managed blockchain ETF, BLOK has the flexibility to choose holdings spanning various aspects of the blockchain industry. Its top 10 holdings as of May 2022 provide exposure to crypto mining (Hut 8), crypto exchanges (Coinbase), blockchain solutions (Galaxy Digital) and more. BLOK also holds Bitcoin ETFs from Canada to get Bitcoin exposure. The diverse holdings allow investors to gain broad exposure to the growth of blockchain.
BLOK performance – outpaced S&P 500 recently
As a relatively new ETF launched in 2018, BLOK does not have a long track record. However, it has performed well recently as blockchain adoption grows. In 2021, BLOK delivered a return of nearly 60%, handily beating the S&P 500’s return of about 27%. However its high concentration in crypto and tech makes it much more volatile. Investors should be aware of the higher risks associated before investing.
BLOK investment risks – high volatility expected
While BLOK provides attractive exposure to the emerging blockchain industry, it does carry higher risks typical of a niche, sector-specific ETF. Its narrow focus on blockchain means it tends to be more volatile compared to broader market ETFs. The cryptocurrency holdings also amplify risk as crypto is known for its wild price swings. As blockchain technologies become more mainstream, BLOK could see reduced volatility.
In summary, BLOK offers investors access to the fast-growing blockchain ecosystem through holdings in areas like crypto mining, exchanges and blockchain solutions companies. It has delivered strong returns recently but carries higher volatility risks. For investors bullish on blockchain and willing to stomach higher risk, BLOK provides actively managed, diversified exposure to ride the growth wave.