Over the course of two weeks in January, four brand new blockchain ETFs hit the market. Despite covering a fairly narrow niche of the tech market, each one managed to come with a few unique characteristics. I covered those four blockchain ETFs in detail not too long ago, but it looks like that list will already need updating. A 5th blockchain ETF, the REX BKCM ETF (BKC) launches this week, and it has the backing of a well-known name in the industry.
BKC is going to be actively managed by cryptocurrency expert Brian Kelly, the Founder and CEO of BKCM, LLC and frequent CNBC Fast Money contributor. He is the author of the book “The Bitcoin Big Bang” and his firm also manages a long/short cryptocurrency hedge fund. In short, BKC is going to be managed by a true blockchain industry expert.
In reviewing the original four blockchain ETFs, there were two fundamental factors that stood out as providing, in my opinion, the greatest opportunity for success. The first is active management. Yes, the ETF industry prefers index funds and the low expense ratios that often come with them, but there are cases where active management still makes sense. Rapidly changing industries, such as blockchain and crypto, is one of them. The Amplify Transformational Data Sharing ETF (BLOK) is the only one of the originals that is actively managed, and in my original analysis, I noted:
In a rapidly changing sector, ETFs need to be able to remain flexible to change their composition quickly. An index fund that only reconstitutes itself periodically won’t be able to do that nearly as effectively. This is one of the relatively few cases where choosing a higher cost actively-managed fund makes more sense.