Future of Finance Monthly Report | July

Future of Finance ETF: Key Takeaways

Over the course of June 2022, the Bloomberg Grayscale Future of Finance Index was subject to the poor performance that struck most risk assets. That said, the end of June brought a notable decrease in volatility[1]; we believe investors should continue to watch the Future of Finance sector to see if it may be indicative of an opportunity to initiate an entry within their growth equity allocation.

The Grayscale Future of Finance UCITS ETF continues to deliver investors exposure to names that are shaping the digital economy, specifically those that are sitting at the intersection of Finance, Technology, and Digital Assets. We believe that these companies are continuing to drive innovation in the modern financial system. As of the quarterly rebalance on 30/06/2022, the Grayscale Future of Finance UCITS ETF delivers exposure to major segments of the ecosystem such as Exchanges (40.15%), Miners (34.81%), Payment Platforms (21.24%), and Asset Management companies (3.80%). [2]

The structural change occurring within the digital economy continues to show long-term growth potential, despite the current, volatile environment. To illustrate, over the trailing two years ending 30/06/2022, we have seen the market capitalization of the 20 stocks in the ETF increase by 282% and expansion into public markets for names like Coinbase and Bakkt Holdings. [3]

Source of all data: Grayscale Investments. Please remember that all performance figures are showing net data. Past performance is not indicative of future performance.

Macro Outlook

Looking forward, it appears that investors are expecting volatility in the equity markets to continue to persist in the near-term. The reality of a rising rate environment combined with inflationary pressures has resulted in global growth coming under pressure, and very few risk assets have provided investors with positive performance this year. Regardless, investors continue to remain steadfast in their long-term asset allocation models. In the U.S., investors allocated $94.6B across equity and fixed income ETFs in the 3-months ending 30/06/2022, with about $48.5B moving into equity ETFs and $46.1B into fixed income ETFs.[4] We believe that investors are starting to look into portions of their portfolios where it may make sense to allocate to opportunities that the recent drawdown has presented, especially in growth-centric baskets and names.

•The Grayscale Future of Finance UCITS ETF delivers pure-play exposure to companies at the intersection of Finance, Technology, and Digital Assets. The still nascent nature of the basket (as it stands today) results in a positive correlation to the performance of digital assets. This is not to say that the Future of Finance basket delivers a replacement for exposure to digital assets, but that investors need to be mindful of the current and near-term environment for digital assets. Volatility is likely to persist for the near-term, but Bitcoin appears to have found significant support at the $20,000 level. [5]

GFOF Performance Table (As of 30.06.22)

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/06/2022. Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

Learn more about our future of finance ETF.