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

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

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

The new fund offer for the Invesco CoinShares Global Blockchain ETF FoF will open on November 24 and close on December 8. Nilesh Dhamanaskar and Krishna Cheemalapati (for debt investment) will be the fund managers of the scheme.

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

The approval of a blockchain fund by an Indian regulator comes at a time when the Indian government is looking to come up 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 to transform the global economy is enormous. Like the Internet, blockchain presents an opportunity for investors who can capture this hidden potential,” said Invesco Mutual Fund said in the product document.

Performance-wise, the Invesco CoinShares Global Blockchain UCITS ETF has given returns of 94% over the past year and 53% since its inception in March 2019.

ETFs based in Ireland had assets under management (AUM) of $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 financial 32.32% and communication services at 12.34%.

Coinbase Global Inc. has the largest allocation in terms of individual shares, 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 a lot of risk, according to the fund house. In addition, the underlying fund has an expense ratio of 0.65%. Notably, the expense ratio of the underlying fund as well as the feeder fund is capped at 2.25% per annum under SEBI regulations.

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