By Christine Idzelis
ETFs related to bitcoin, blockchain are skyrocketing so far this year
Hello! This week’s ETF Wrap looks at top performers in the first half of 2023, as well as flows, as stocks rally and crypto-related funds jump so far this year.
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Cryptocurrency-related exchange-traded funds are skyrocketing in the first half of 2023 as bitcoin rebounds from last year’s selloff, outperforming other U.S.-listed ETFs so far this year, according to CFRA Research.
The top 15 ETFs in terms of performance this year have exposure to crypto or blockchain, said Aniket Ullal, head of ETF data and analytics at CFRA, in a phone interview. That’s based on a screening of nonleveraged ETFs, he said, with the Valkyrie Bitcoin Miners ETF (WGMI) topping the list with a year-to-date return of nearly 189% percent through June 27.
Crypto funds got a recent boost from this month’s application by BlackRock, the world’s largest asset manager, for a spot bitcoin ETF, according to Ullal. “It’s created more optimism about a spot bitcoin ETF being approved,” potentially, by the Securities and Exchange Commission, he said.
Top 15 ETFs so far this year %Performance Valkyrie Bitcoin Miners ETF WGMI 188.8 VanEck Digital Transformation ETF DAPP 146.1 Global X Blockchain ETF BKCH 130.9 Bitwise Crypto Industry Innovators ETF BITQ 128.6 Invesco Alerian Galaxy Crypto Economy ETF SATO 125.1 Global X Blockchain & Bitcoin Strategy ETF BITS 106.0 iShares Blockchain and Tech ETF IBLC 92.0 Simplify Bitcoin Strategy PLUS Income ETF MAXI 84.8 Hashdex Bitcoin Futures ETF DEFI 84.2 ProShares Bitcoin Strategy ETF BITO 81.7 VanEck Bitcoin Strategy ETF XBTF 81.3 Fidelity Crypto Industry and Digital Payments ETF FDIG 79.6 Valkyrie Bitcoin Strategy ETF BTF 79.4 First Trust SkyBridge Crypto Industry & Digital Economy ETF CRPT 76.0 Grayscale Future of Finance ETF GFOF 73.0 Source: CFRA RESEARCH, DATA AS OF JUNE 27, 2023
The largest bitcoin exchange-traded fund is the ProShares Bitcoin Strategy ETF (BITO), said Ullal. The ETF, which primarily invests in bitcoin futures contracts, has around $1 billion of assets under management, according to FactSet data. While the fund does not invest directly in the cryptocurrency, it has closely tracked spot-bitcoin performance, ProShares says in the ETF’s fact sheet at the end of March.
Bitcoin prices plunged last year in a tumultuous 2022 for markets, with the cryptocurrency sinking as inflation soared and stocks and bonds sold off. Markets sank as the Federal Reserve battled the high cost of living with a rapid pace of interest-rate hikes that has slowed this year.
On Thursday afternoon, bitcoin was trading around $30,562, according to CoinDesk data. That’s about double its trading level in late 2022, but still well below its peak approaching $70,000 in 2021.
In mid-June, BlackRock applied for a spot bitcoin ETF named iShares Bitcoin Trust, according to a document filed with the SEC. Bitcoin prices were then trading around $25,000. On Thursday, Fidelity refiled paperwork for a spot bitcoin ETF.
Meanwhile, a mix of stock and bond ETFs have seen the biggest inflows in the first half of 2023.
The Vanguard S&P 500 ETF (VOO) has attracted the most capital this year through June 27 with flows of around $13.8 billion, followed by the iShares 20+ Year Treasury Bond ETF (TLT) at around $11.3 billion and iShares MSCI USA Quality Factor ETF (QUAL) at $9.9 billion, according to Ullal. The JPMorgan Equity Premium Income ETF (JEPI) garnered the next largest inflows over the same period at $9.7 billion, while the iShares Core U.S. Aggregate Bond ETF (AGG) ranked fifth by attracting $8.3 billion, he said.
Among actively managed equity funds, the JPMorgan Equity Premium Income ETF, which invests in low-volatility stocks, while using a covered call options strategy to generate income, has raked in the most inflows this year through June 27, said Ullal.
That’s despite the fund lagging behind the S&P 500 over the same period with a total return of 4.8%, according to FactSet data.
The strategy used by the JPMorgan Equity Premium Income ETF is designed to fare relatively well in a “horizontal” stock market, not to beat it when equities are rising quickly, he said. Shares of the SPDR S&P 500 ETF Trust (SPY) have soared a bit more than 14% this year through June 27, for a total return of 14.9%.
Some people may have been “caught off guard” by the U.S. stock market’s rally during the first half of this year, said Ullal.
As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.
-Christine Idzelis
The good…
Top Performers %Performance ARK Next Generation Internet ETF ARKW 4.1 ARK Fintech Innovation ETF ARKF 4.0 U.S. Global Jets ETF JETS 3.7 iShares US Transportation ETF IYT 3.6 ARK Innovation ETF ARKK 3.5 Source: FactSet data through Wednesday, June 28. Start date June 22. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater
…and the bad
Bottom Performers %Performance KraneShares Global Carbon Strategy ETF KRBN -6.7 FirstTrust NYSE Arca Biotechnology Index Fund FBT -4.3 Xtrackers MSCI EAFE Hedged Equity ETF DBEF -4.1 Invesco DB Agriculture Fund DBA -4.1 First Trust Global Tactical Commodity Strategy Fund FTGC -4.0 Source: FactSet data
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