Sebi allows Invesco MF to launch India’s first blockchain feeder fund

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Sebi allows Invesco MF to launch India’s first blockchain feeder fund


NEW DELHI: Markets regulator Securities and Exchange Board of India (Sebi) has approved the Invesco CoinShares Global Blockchain ETF Fund of Fund (FoF), which will be the first scheme in India to offer exposure to global companies participating in the blockchain ecosystem.

The feeder fund will invest in Ireland-domiciled Invesco CoinShares Global Blockchain UCITS Exchange-traded Fund (ETF). The fund holds investments such as Canadian bitcoin miner Bitfarms Ltd, US crypto exchange Coinbase Global Inc and the world’s biggest corporate crypto holder MicroStrategy Inc.

The underlying fund was earlier called Invesco Elwood Global Blockchain UCITS ETF, with the name changed after digital asset manager CoinShares International Ltd acquired the ETF index business from Elwood Technologies.

The new fund offer for Invesco CoinShares Global Blockchain ETF FoF will open on 24 November and close on 8 December. Neelesh Dhamnaskar and Krishna Cheemalapati (for debt investments) will be the scheme’s fund managers.

Blockchain is a digital ledger system that facilitates the process of recording transactions and tracking assets in a network. Virtually, anything of value can be tracked–from medical records to food supply chain transactions–using the blockchain technology.

The approval of a blockchain fund by an Indian regulator has come at a time when Indian government is looking to come out with regulations on cryptocurrencies such as Bitcoin and Ethereum.

To be sure, blockchain is not bitcoin and is the underlying technology that enables bitcoin.

“As blockchain technology is still in its early days, the potential for changing the global economy is immense. Like the internet, blockchain presents an opportunity for investors who can capture this hidden potential,” Invesco Mutual Fund said in the product document.

Performance-wise, Invesco CoinShares Global Blockchain UCITS ETF has delivered a return of 94% in the past one year and 53% since its inception in March 2019.

The Ireland-domiciled ETF had assets under management (AUM) worth $1.07 billion, or 8,041.21 crore, as of 2 November 2021.

In terms of sector allocation information technology has a weightage of 49.98%, followed by financials 32.32% and communication services 12.34%.

Coinbase Global Inc has the biggest allocation in terms of individual stocks at 4.83%, followed by Japan-based GMO internet Inc (4.34%) and South Korea’s Kakao Inc (4.32%).

Investors should note that the CoinShares Global Blockchain ETF FoF carries very high risk as per the fund house. Further, the underlying fund has an expense ratio of 0.65%. Notably, the expense ratio of the underlying fund as well as the feeder fund combined is capped at 2.25% as per annum under Sebi rules.

The minimum investment during the NFO period is 1,000, and the multiples of Re 1, thereafter. There will be an exit load of 0.50% if units are redeemed or switched out before one month from the date of allotment, and nil, thereafter.

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