State Street Global Advisors has introduced a trio of actively managed thematic ETFs sub-advised by digital asset investment specialist Galaxy Asset Management.
Anna Paglia, Chief Business Officer at State Street Global Advisors.
The SPDR Galaxy Digital Asset Ecosystem ETF (DECO US), SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO US), and SPDR Galaxy Transformative Tech Accelerators ETF (TEKX US) have been listed on Nasdaq.
DECO
The SPDR Galaxy Digital Asset Ecosystem ETF invests in a mix of digital assets, utilizing both spot and futures-based crypto ETFs, as well as a broad swathe of companies that are poised to benefit from the growing adoption of the blockchain and digital asset industries.
Galaxy assesses macroeconomic factors such as interest rates, money supply, and inflation to determine the fund’s allocation between crypto assets and companies operating within the digital asset ecosystem. Crypto asset exposure is increased, up to a maximum of 25%, when conditions favour higher risk tolerance and rising crypto asset prices and reduced when conditions are more risk-averse.
Companies considered eligible within the theme include miners and validators, blockchain technology providers, trading platforms, custodians, crypto-related payment processors, infrastructure providers such as data centres, businesses using blockchain for operational purposes, and organizations offering blockchain-related education, research, or consulting services.
Stock selection is based on fundamental analysis, emphasizing financial statements, management teams, and corporate governance structures.
The fund comes with an expense ratio of 0.65%.
HECO
The SPDR Galaxy Hedged Digital Asset Ecosystem ETF delivers the same investment strategy as DECO but additionally manages volatility through the incorporation of covered call and protective put options on the equity investments held in the portfolio.
The fund comes with an expense ratio of 0.90%.
TEKX
The SPDR Galaxy Transformative Tech Accelerators ETF, meanwhile, targets companies within the digital asset value chain that are supporting new disruptive technologies, such as blockchain innovations and artificial intelligence.
The fund pursues this long-term secular growth opportunity by investing in industries integral to the development and support of these innovations, including semiconductor companies, energy producers, data centers, cloud computing firms, and bitcoin mining companies.
The investment strategy involves an integrated valuation framework – macroeconomic factors such as GDP growth, inflation, and interest rates are evaluated to understand broader market conditions; fundamental analysis focuses on assessing the financial health and intrinsic value of companies; and technical analysis identifies market trends to further support sector allocation and stock selection.
The fund comes with an expense ratio of 0.65%.
Commenting on the new listings, Anna Paglia, Chief Business Officer at State Street Global Advisors, said: “Digital assets and blockchain technology have the power to transform financial markets as well as the economy over the next decade, and a number of companies will grow and flourish thanks to their contribution to this transformative technology. Some investors are not comfortable with the short-term, volatile price swings of single-currency crypto. We believe the next evolution of this market is the introduction of actively managed digital asset portfolios that help investors tap into the benefits of diversification, which is appealing to a wider range of investors, and why we are excited to bring these three products to market.”
Chris Rhine, Head of Liquid Active Strategies at Galaxy Asset Management, added: “With the rapid evolution of digital assets and blockchain technology, it’s crucial to have a dynamic approach to investing in this asset class. Our new suite of actively managed ETFs allows investors to capitalize on the opportunities within this transformative space while managing the inherent volatility. By integrating Galaxy’s deep expertise in digital assets with State Street’s robust ETF infrastructure, we’re positioned to deliver long-term value in a market that is reshaping the future of finance.”