Charles Schwab is the latest institutional investor to launch a fund focused on the controversial crypto industry.
The Westlake-based financial giant’s asset management arm will launch its first crypto-related ETF on or about Aug. 4. The Schwab Crypto Thematic ETF will track the Schwab Crypto Thematic Index, which invests in companies that “may benefit from the development or utilization of cryptocurrencies and other digital assets,” the announcement said.
Schwab emphasizes in its announcement that the fund will not invest in crypto directly. Instead, it invests in companies that benefit from crypto-related activities, like mining or staking, developing blockchain applications and enabling the use of digital assets to buy or sell goods and services.
“For investors who are interested in cryptocurrency exposures, there is a whole ecosystem to consider as more companies seek to derive revenue from crypto directly and indirectly,” David Botset, managing director at Schwab Asset Management, said in a statement.
Buying into a crypto-related ETF may give more risk-averse investors a way to gain exposure to the industry. The prices of cryptocurrencies have plummeted since reaching highs in November, scaring some investors away. The price of Bitcoin is down about 65% since it peaked in early November.
The fund will trade on the New York Stock Exchange under the ticker “STCE” and will have a fee of 0.30%, which Schwab claims is the lowest cost for a crypto-related ETF. On its website, Schwab says that 85% of its market cap index ETFs have expenses lower than 0.10%.
ETFs are baskets of securities that are often focused on specific sectors, like energy or technology. They reduce the risk that comes with investing heavily in one stock. Thematic ETFs focus on specific “themes” like climate change or crypto versus a specific sector. Thematic ETFs are often banking on emerging technologies seeing big wins 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 Fidelity launched the Fidelity Crypto Industry and Digital Payments ETF with an expense ratio of 0.39%, which it claimed was the lowest available at the time. Now, Schwab has undercut that cost.
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%.
