4 Ways to Invest in the Blockchain Boom
“Want to hear something neat? My portfolio is up 24% this year.”
I watched my parents’ eyes pop after I spoke. You know, the “deer in the headlights” doom stare. Gotta say: not the reaction I was expecting.
We were at dinner and, as a developed favorite pastime, my parents were drilling me about the market.
My mom answered first: “Oh … my portfolio is up 5%.”
It seems they were letting their 401(k)s do all the work, and they were stuck in slow-growth funds that were barely matching the market’s rise this year.
Why was I doing almost five times better? Well, my main takeaway is this: I’m keeping an eye on disruptive tech trends.
As I mentioned on Saturday, one of those trends is blockchain technology. Experts project the industry will soar 77,400% as it explodes from a $4 billion market to a $3.1 trillion one. That’s something any investor would want to be a part of.
But investing in a new industry can be scary. Where do you start?
Well, I’ll tell you what I told my parents: Use an exchange-traded fund (ETF). That’s how you can easily start gaining broad, diverse exposure to the industry right as it booms.
Right now, there are a handful of ETFs that just hit the market. In late January, four blockchain ETFs launched in quick succession:
- The Innovation Shares NextGen Protocol ETF (NYSE: KOIN): $7.7 million in assets.
- First Trust Indxx Innovative Transaction & Process ETF (Nasdaq: LEGR): $44.4 million.
- The Reality Shares Nasdaq NexGen Economy ETF (Nasdaq: BLCN): $115 million.
- The Amplify Transformational Data Sharing ETF (NYSE: BLOK): $167 million.
But one of these ETFs is a better bet than the others. Here’s their performance laid out over the last three months:
From a quick glance, you might think KOIN (up 6.3%) is more promising. But it’s not very liquid or able to give you broad exposure.
BLOK is a solid pick considering it’s actively managed, but it tilts toward large caps, which makes it a less-effective blockchain play.
The one you want to pay attention to is BLCN (the bold blue line). It’s a purer, short-term play on blockchain — and, as of today, it crossed above its 50-day moving average, an important trend line.
Just know that blockchain ETFs have an expense ratio of 0.65% to 0.70% a year — or about $6.50 for every $1,000 invested. That’s a bit pricy for an ETF, and about the same as an actively managed mutual fund.
So if you’re looking for a more direct play, I’d suggest getting in on the stocks with the best chance of skyrocketing during the coming boom. To learn how, just click here.
Managing Editor, Banyan Hill Publishing