Future of Finance Monthly Report | October

Future of Finance ETF: Key Takeaways

• September 2022 was marked by a tough last two trading weeks where the Bloomberg Grayscale Future of Finance Index saw poor performance and closed the month with negative returns. The index was subject to the same, broad-based volatility that struck most risk assets as the VIX Index closed the month of September at 31.62, the highest level since June, as GFOF underperformed major equity benchmarks such as the S&P 500, Russell 200, and the MSCI ACWI Index.

• Inflation-driven headwinds and monetary policy continues to be top-of-mind for most investors as many of them rebalanced portfolios in the 3rd quarter of 2022 and reviewed allocations and overall positioning. September saw a key measure of inflation, the Consumer Price Index (CPI) come in higher (8.3% actual YoY change) than expected (8.1%), which has continued to add pressure to longer-duration segments in both equity and fixed income portions of portfolios. Even though the Future of Finance theme delivers exposure to companies at the forefront of a still nascent theme, and several companies and their cash flows live on longer time horizons, investors should keep in mind that throughout the entire 3rd quarter of 2022, the Grayscale Future of Finance UCITS ETF delivered double-digit gains and notably outperformed the above equity benchmarks, most of which delivered negative returns.

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

• The Future of Finance theme represents companies at the intersection of Finance, Technology, and Digital Assets. We want to stress that this does not mean changes in the prices of cryptocurrencies are the only driver of the performance of Future of Finance companies, but we continue to track the performance of digital assets such as Bitcoin as a barometer of theme. Bitcoin continues to find notable support near the $20,000 level, which we continue to believe is constructive for many Future of Finance companies.

• Future of Finance companies continue to develop, test, and deploy new products and services that are driving innovation and disruption to the modern financial system. While not a public company, the Depository Trust and Clearing Corporation (DTCC) announced in August that its Project Ion platform had gone live and into production. The Project Ion platform is an alternative settlement platform built upon a distributed ledger technology and is now processing an average of over 100,000 bilateral equity transactions per day. Project Ion’s stated goal is to “…ultimately provide a resilient, secure and scalable alternative settlement service to clients for firms who wish to take advantage of the emerging technology.”

• The end of September brought upon a quarterly rebalance for the Grayscale Future of Finance UCITS ETF where we saw three new companies added to the theme: Signature Bank (NASDAQ: SBNY), Core Scientific Inc. (NASDAQ: CORZ), and Iris Energy Ltd. (NASDAQ: IREN). These three new names are emblematic of the continued growth of the Future of Finance theme, and they represent the expansion of the Financial Foundations and Digital Asset Infrastructure segments.

Past performance is not indicative of future performance. When you invest in ETFs, your capital is at risk.

GFOF Performance Table (As of 30.09.22)

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/09/2022. 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.

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