Canada has remained at the vanguard of cryptocurrency ETFs, and the trend is expected to continue with new options that track Bitcoin and Ethereum and payout monthly. Purpose Investments, which in February launched the first ETF in North America to follow the price of Bitcoin, has announced the introduction of more ETFs.
Ethereum and Bitcoin ETFs launched in Canada
The non-currency hedged units of the ETFs, priced in Canadian dollars, began trading on the Toronto Stock Exchange today under the tickers BTCY.B (Purpose Bitcoin Yield ETF) and ETHY.B (Ether Bitcoin Yield ETF) (Purpose Ether Yield ETF).
The new Bitcoin and Ethereum ETFs vary from those that began trading earlier this year in that they offer investors a monthly yield. Purpose Investments claims that its derivatives-based covered call strategy is the first of its kind in the crypto world.
Purpose Investment notes that due to volatility, it can’t guarantee the dividend amount, but expects an annual yield of between 8percent and 10percent for both ETFs, which will be categorized as income in non-registered accounts. Both have a 1.10 percent management charge.
This strategy, like pure-play cryptocurrency ETFs, will expose investors to the ups and downs of the underlying digital asset’s price. However, because of the monthly payouts, there is a tradeoff: capital gains potential is limited in contrast.
It also means that capital losses will be minimized and that volatility would be reduced. Investors could explore these ETFs, according to Vlad Tasevski, chief operating officer and head of product at Purpose Investments, if they want exposure to the asset class without the volatility associated with crypto markets.
“They should also think about whether they wish to earn a return while holding them.” He told Yahoo Finance Canada that covered call options “enable investors to create additional short-term income on an asset they believe has long-term potential.”
“Because of the link between underlying asset volatility and premiums, covered call strategies on cryptocurrencies provide investors with unique exposure to a unique asset class, allowing them to earn a high yield without sacrificing considerable price participation.”
A third fund, the Purpose Crypto Opportunities ETF, started trading today as well. Under the tickers CRYP, CRYP.B, and CRYP.U, non-currency hedged ETF non-currency hedged units denominated in Canadian dollars and non-currency hedged ETF non-currency hedged units denominated in US dollars begin trading today.
Purpose claims to employ an actively managed strategy aimed at long-term capital appreciation, primarily through digital assets and securities with direct and/or indirect exposure to digital assets. 1.25 percent in the management charge.
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