The Future of Finance ETF closed the month of October on a positive note, delivering slightly positive performance amidst a challenging month for broad-based equity benchmarks. GFOF delivered significant outperformance in the closing weeks of the month of the back of the leadership in digital assets, most notably Bitcoin. Future of Finance companies delivered differentiated results relative to more nuanced sector and industry exposures (such as Information Technology and Financials) and against other high-growth thematic exposures such as Exponential Technology.
Several mining companies were leaders among Future of Finance companies through October – and two names delivered total returns in excess of 25% on the month: Cipher Mining and Hut 8 Mining. Both companies recently delivered operational updates where Cipher Mining produced ~ 428 BTC in October and Hut 8 Mining produced ~ 112 BTC. Hut 8 Mining continues to carry one of the industry’s largest self-mined reserves of Bitcoin which currently totals over 9,000 BTC. Hut 8 Mining, among several mining companies, continues to increase hashrate capacity and compute power as facility expansion remains top-of-mind into the closing months of 2023.
The evolution of traditional financial services firms tilting towards a future that intertwines Finance, Technology, and Digital Assets Infrastructure has been, at times, episodic – but 2023 has marked material progress across several areas. In August, PayPal introduced their own stablecoin, PYUSD, as it works to build bridges between the existing financial system and the digital economy. Most recently, PayPal was added to the U.K Financial Conduct Authority (FCA) register as an authorized electronic money institution and consumer credit firm. More critically, PayPal registered as a digital asset business, bringing digital asset products and services to customers in a new market.
Source of all performance data: Grayscale / Bloomberg. Data as of 31/10/2023. Please remember that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.
Macro Outlook
GFOF closed October with positive momentum after finding support near levels last seen in May and June. On a technical basis, the Future of Finance ETF looks set to reclaim its 50D moving average, with the 100D moving average just 6% away. Investors tracking the performance in shorter time frames is likely well aware that the basket of publicly traded equities has lagged the recent outperformance in digital assets (specifically Bitcoin), a positive correlation that has driven short-term outcomes for GFOF throughout this calendar year.
At the close of October and on the first of November, the Federal Open Market Committee (“FOMC”) met and delivered a no change decision to overnight interest rates (5.25% - 5.50%). While Fed Chairman Jerome Powell said that the central bank was watching data closely and was keeping its options open for further rate increases (the Chairman stressed that this decision should not be mistaken for a signal that the Fed is done with its current tightening cycle), markets appear to have taken this meeting as notably positive, and risk assets appear to hold some momentum into the closing months of the year. Thematic exposures such as the Future of Finance have consistently delivered “high-beta” results relative to other exposures within the equity sleeve, and investors should watch the theme for that potential to continue – this is especially true if momentum in the digital assets space continues.
Sources available upon request. When you invest in ETFs your capital is at risk.
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1M
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3M
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6M
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YTD
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12M
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SI
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Grayscale Future of Finance UCITS ETF
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1.91%
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-32.39%
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-1.46%
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44.48%
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-5.41%
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-25.42%
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Bloomberg Grayscale Future of Finance Index
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2.04%
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-32.29%
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-1.21%
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44.72%
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-5.13%
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-25.53%
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Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/10/2023
Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a 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.