Canada continues to be at the forefront of cryptocurrency ETFs and today the trend continues with new offerings that track bitcoin and ethereum, while offering monthly payouts.
Purpose Investments, which also introduced the first ETF in North America created to track the price of bitcoin in February, today launched new ETFs,
Unhedged currency units of the Canadian dollar denominated ETFs began trading on the Toronto Stock Exchange today under the symbols: BTCY.B (Purpose Bitcoin Yield ETF) and ETHY.B (Purpose Ether Yield ETF).
The main difference between the new bitcoin and ethereum ETFs and those that started trading earlier this year is that they pay investors a monthly return. This is done through a derivative-based covered call strategy, which Purpose Investments says is the first of its kind in the crypto space.
Purpose Investment says it cannot guarantee the payment amount due to volatility, but expects an annual return of between eight and ten percent for both ETFs, and is classified as income in non-registered accounts. The management fee for both is 1.10 percent.
Less volatile way to play crypto
Like outright cryptocurrency ETFs, this strategy will expose investors to the ups and downs in the price of the underlying digital asset. But the monthly payments mean there is a trade-off – that the upward capital gains are limited in comparison.
It also means that the capital losses will be lower and that there will be less volatility. Vlad Tasevski, COO and product manager at Purpose Investments, said investors might consider these ETFs if they want to gain exposure to the asset class without the fluctuations associated with crypto markets.
“They should also ask themselves if they want to earn a return while they are holding them. Covered calls allow investors to generate additional short-term income on an asset that they believe has long-term potential, ”he said. Yahoo Finance Canada.
“Given the link between the volatility of the underlying asset and premiums, covered buy strategies on cryptocurrencies provide unique exposure to a single asset class, providing investors with high returns without sacrificing a significant participation in the prize. “
A third fund called Purpose Crypto Opportunities ETF also started trading today. Unhedged Canadian dollar ETF units and unhedged US dollar ETF units begin trading today under the symbols: CRYP, CRYP.B and CRYP.U.
Purpose says it uses an actively managed approach targeting long-term capital appreciation primarily through digital assets and securities offering direct and / or indirect exposure to digital assets. The management fee is 1.25 percent.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on twitter @jessysbains.
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