Coin Capital Investment Management (Coincapital), an Ontario Securities Commission-registered subsidiary of digital asset trading platform Coinsquare, has has debuted two ETFs on the Toronto Stock Exchange, becoming the latest firm to enter the fast-growing ETF market in Canada.
Coincapital celebrated the launch of their two debut ETFs by opening the market at the Toronto Stock Exchange.
The new funds – the Coincapital Stoxx Blockchain Patents Innovation Index Fund (LDGR CN) and the Coincapital Stoxx B.R.AI.N. Index Fund (THNK CN) – provide investors with exposure to companies poised to benefit from developments in emerging technologies including blockchain, biotechnology, robotics, artificial intelligence (AI), Blockchain and nanotechnology.
“Canadians know technologies like AI and the blockchain are going to change the way we live and work, but it can be difficult to access high quality investments in these sectors without deep domain expertise,” said Lewis Bateman, CEO of Coincapital.
“We’re doing the work for investors, using our in-depth industry knowledge to provide Canadians with an innovative suite of investment options that help them invest in new technology even if they’re not an expert,” he added.
Blockchain
The first fund, LDGR, tracks the iStoxx Yewno Developed Markets Blockchain Index. The index utilizes a proprietary AI algorithm to select stocks of firms that are investing in research and development of blockchain technologies. Constituents are derived from developed markets.
Each company is assigned a blockchain IP score using Yewno’s research the fields of complex systems, computational linguistics, and artificial intelligence to determine a firm’s exposure to the blockchain theme. The score is derived from two metrics: IP Exposure and Contribution.
Blockchain IP Exposure is defined as the ratio of the number of blockchain patents awarded to a company over the most recent three-year period to the total number of patents awarded to that company over the same period. It provides an indication of the importance of blockchain research and applications to the overall activities of each company.
Blockchain Contribution is defined as the ratio of the number of blockchain patents awarded to a company over the most recent three-year period to the total number of blockchain patents awarded to all companies in the index universe. It provides an indication of the importance of each company’s blockchain research and applications to the overall blockchain-related activities of other companies in the index universe.
Finally, the 100 stocks with the highest blockchain IP scores are selected for inclusion. Constituents are weighted by free-float market capitalization adjusted to increase the weight of those stocks with the higher blockchain IP scores. No single stock may account for more than 8% of the index weight and the sum of weights above 4.5% are constrained to 35% total.
Nascent technology
The second fund, THNK, taps into four megatrends in technology and invests in global equity securities of companies that work in biotechnology, robotics, artificial intelligence, and nanotechnology.
The ETF tracks the iStoxx Developed Markets B.R.AI.N Index which uses FactSet’s Revere Business Industry Classification System (RBICS) to determine a firm’s exposure to the above four technology themes. A firm must derive at least 50% of its revenue from one or across many of the four themes to be eligible for inclusion.
The methodology then creates four separate theme-specific selection lists, each containing the 20 securities with the highest revenue exposure to the corresponding theme. The lists are combined and duplicates removed to obtain the final list of index constituents.
Firms are weighted by a combination of their free float-adjusted market cap and their aggregate revenue exposure across all four themes. Reconstitution and rebalancing occur quarterly.
Both ETFs come with management expense ratios (MERs) of 0.64%.