Charles Schwab is the latest institutional investor to launch a fund focused on the controversial crypto industry.
The wealth management arm of the Westlake-based financial giant will launch its first crypto-related ETF around August 4th. The Schwab Crypto Thematic ETF will track the Schwab Crypto Thematic Index, which invests in companies that “could benefit from the development or use of cryptocurrencies and other digital assets,” according to the announcement.
In his announcement, Schwab emphasizes that the fund will not invest directly in cryptocurrencies. Instead, it invests in companies that profit from cryptocurrency-related activities such as mining or staking, develop blockchain applications, and enable the use of digital assets to buy or sell goods and services.
“For investors interested in gaining exposure to cryptocurrencies, there is an entire ecosystem to consider as more companies seek to directly and indirectly generate income from cryptocurrencies,” said David Botset, chief executive of Schwab Asset Management, in one Explanation.
Buying into a crypto-related ETF can offer risk-averse investors a way to gain exposure to the industry. Cryptocurrency prices have fallen sharply since their November peak, which has spooked some investors. Bitcoin’s price has fallen about 65% since its peak in early November.
The fund trades on the New York Stock Exchange under the ticker “STCE” and has a 0.30% fee, which Schwab says is the lowest for any crypto-related ETF. Schwab says on its website that 85% of its market-cap index ETFs have costs less than 0.10%.
ETFs are baskets of securities, often targeting specific sectors such as energy or technology. They reduce the risk that comes with investing heavily in a single stock. Thematic ETFs focus on specific “themes” such as climate change or cryptocurrencies versus a specific sector. Thematic ETFs often rely on new technologies and will see big gains in the future.
Schwab isn’t the first traditional investor to launch an ETF in the crowded crypto space this year.
In April, Boston-based firm Fidelity launched the Fidelity Crypto Industry and Digital Payments ETF with an expense ratio of 0.39%, which it said was the lowest available at the time. Now Schwab has lowered these costs.
A few days later in April, New York-based BlackRock, the world’s largest asset manager, launched the iShares Blockchain and Tech ETF, which has a higher expense ratio of 0.47%.
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