Investors bullish on the future of blockchain and crypto have a new option for investing in the industry. Last Week, Charles Schwab Corporation (NYSE:SCHW) announced it was launching its first exchange-traded fund (ETF) focused on cryptocurrency: the Schwab Crypto Thematic ETF (NYSE Arca: STCE). It is expected to start trading on Aug. 4. The company says that its annual operating expense ratio of 0.30% will make it, "the lowest cost crypto-related ETF available to investors today."
However, the fund itself won't invest in digital currencies themselves. Instead, it will give investors exposure to businesses that are involved in crypto. For example, companies that permit using digital currencies to pay for products and services will likely be included in the fund. Businesses that are developing blockchain applications will also be the fund's targets. This can create a potentially wide array of stocks that can be held within the ETF. However, Schwab cautions that the fund is not diversified, and investors may not get much in the way of safety from it.
In just the past year, top digital currency Bitcoin has fluctuated wildly, hitting highs of nearly $69,000 and lows of less than $18,000. This fund may not be that volatile, but there's still likely going to be considerable risk with it. If you're a risk-averse investor, it likely doesn't make investing in crypto safe enough for you to consider the ETF as a viable investment.
If, however, you're okay with the risk and optimistic on the future of digital currencies and don't want to track all the different up-and-coming companies involved in the sector, it could be a worthwhile investment to add to your portfolio.
