With the rapid ascension, subsequent fall, and now possible stabilization of Bitcoin, Blockchain and crypto have moved from specialty assets to become a part of the vernacular. Recent statistics show that the crypto price moves are uncorrelated with other asset classes and strategies. This makes them of special interest to investors looking to hedge their portfolios, in some cases even functioning as apparent safe havens alongside traditional assets like precious metals and Treasurys.
Toroso Asset Management focuses on the Blockchain and cryptocurrency universe, seeking to identify companies that are winners in the space via the Amplify Transformational Data Sharing ETF (NYSEArca: BLOK). BLOK is managed by Toroso Investments and Exponential ETFs. The two sub-advisers utilize a robust, structured process and follow a strict selection methodology to identify the leading publicly-traded companies that are actively engaging in the development and utilization of blockchain technologies. From there, the managers classify the companies given how much revenue they derive from blockchain-related business and manage its placement and weighting in the portfolio based on company fundamentals, valuation and relevant news.
“So our focus generally speaking is about ecosystems,” said Dan Weiskopf, Portfolio Manager at Toroso Asset Management. “At Toroso Asset Management, we’re experts in ETFs and ETF ecosystems generally. We’ve been around for about six years, and when we approach the Blockchain space, we’re trying to identify what we think would be the big winners, and avoid some of the losers, and really hone in on what firms have a Blockchain or crypto strategy.”
Facebook recently unveiled its plans for its Libra digital currency that could, according to some market observers, bring some much-needed stability to the often volatile world of cryptocurrencies. Weiskopf seems to agree.
“We do own some Facebook, and we think every firm in general needs to have a Blockchain strategy,” he said. “Whether they need to be a part of that collaboration is a whole different issue. Listen, we all know it’s difficult to work with outsiders, right? So sometimes it’s a cultural thing. So we’re not overthinking it necessarily, but focused in on what industries will be affected by Blockchain and crypto.”
Infrastructure is also an extremely important and growing space, and Weiskopf sees more efficient systems developing in the future, despite the increased regulation related to cryptocurrencies.
“The irony behind regulation is that financial services will be affected by all this. Sure they’ll probably become more efficient and so we are trying to identify some of the winners in that area, a bit through whether it’s merchant banking companies or financial services companies,” he said.
Finally, one benefit of the crypto space is that it diversifies into a more global arena, targeting often overlooked countries outside the U.S. in particular.
“Generally I think everybody seems to be focused around the US as an investment option. We are looking globally and Opera is another company that we are also owners of, and that changing how money might be transferring in Africa, where there’s a real problem. I think very often as a US investor we’re too focused on what’s happening here, and the block chain and crypto space is more about outside of US,” Weiskopf added.
Watch Dan Weiskopf, Portfolio Manager at Toroso Asset Management, discuss ETFs, equities in the digital asset and Blockchain technology space:
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