Ark Invest and 21Shares to Launch Bitcoin Futures ETFs
Empowered Funds has applied for the launch of three Bitcoin futures exchange-traded funds (ETFs), which will bear the names of the Ark Invest and 21Shares brands. While the ETFs will use the Ark and 21Shares brands, these two companies will serve as sub-advisors and sub-sub-advisors to the funds, respectively. Empowered, a subsidiary of Alpha Architect and operating as EA Advisers, will act as the advisor to the funds.
The Ark 21Shares Active Bitcoin Futures ETF will primarily invest in Bitcoin futures traded on the Chicago Mercantile Exchange. Additionally, the ETF will serve as an underlying ETF in two other Bitcoin-related ETFs. The Ark 21Shares Active On-Chain ETF’s prospectus reveals that the Bitcoin Strategy ETF will invest at least 25% of its assets in the Digital Asset and Blockchain Strategy ETF. The On-Chain ETF will use a proprietary trend indicator model to adjust its allocation strategy based on whether the Bitcoin market trend is bullish or bearish. According to the prospectus, under bullish conditions, the ETF may invest 100% of its assets in the underlying ETF. Under bearish conditions, the fund will allocate up to 75% of its assets to US government bonds, money market instruments, and repurchase agreements. The ETF’s investment team will adjust the fund’s engagement in Bitcoin futures based on the model’s trend assessment, as stated in the filing. While the ETF’s investment team will rely on the model, it will determine the allocation of the active ETF’s Bitcoin futures at its discretion.
Meanwhile, the Ark 21Shares Digital Asset and Blockchain Strategy ETF will invest in the underlying ETF along with “investments that enable exposure to digital assets and companies operating in the blockchain, digital asset, technology, and fintech industries,” according to its prospectus. This ETF may invest up to 80% in the Bitcoin futures ETF or other assets and up to 20% of its assets in cash or cash equivalents such as government bonds and real estate investment trusts.
Fees for the ETFs have not been disclosed. According to the documents, Ophelia Snyder, co-founder and president of 21Shares, will serve as portfolio manager of the funds. Ark and 21Shares may be seeking to diversify their offerings of Bitcoin ETFs and could be attempting to launch their own futures ETF to use in their other ETF strategies, said Roxanna Islam, deputy director of research at VettaFi. “While the current news revolves around spot filings for Bitcoin ETFs, realistically, it may still take a long time for approval,” she said. “It seems Ark is trying to leverage current resources and expand its current offering of crypto funds while keeping the goal of a spot Bitcoin ETF in mind.”
The two managers applied for the launch of a spot Bitcoin ETF in April, but last week the Securities and Exchange Commission postponed its decision on approving the ETF. Ark amended its spot Bitcoin ETF filing in June after a series of similar filings by major managers such as BlackRock, Fidelity, and Invesco. According to data from Morningstar Direct, Empowered Funds’ parent company, Alpha Architect, offers 15 ETFs with assets of $1.9 billion as of July 31. Investors have poured $717 million into these funds this year.