Invesco mutual fund may soon launch blockchain fund; should you invest?

• Follow

It may be a dream come true for mutual fund investors, as they may soon be able to invest in a worldwide product that invests in companies involved in the blockchain technology businesses.

Blockchain is a distributed ledger technology that enables businesses and individuals to store and transfer information securely. While blockchain is frequently used in conjunction with cryptocurrencies such as Bitcoins, it is not the same as crypto.

Blockchain is the technology that enables cryptocurrencies to exist. Among other applications, the technology is employed in cryptocurrency mining hardware, technological operations, financial services, and payment systems.

Recently, Invesco Mutual Fund has filed papers with the Securities and Exchange Board of India (Sebi) to launch a scheme that will invest in Invesco Elwood Global Blockchain Exchange Traded Fund. The scheme’s name is Invesco India – Invesco Elwood Global Blockchain Fund of Fund (FoF). The category of the scheme falls under the FoF (Overseas).

In simple terms, blockchain ETFs invest in stocks of the companies that have their business operations in blockchain technology with an aim to earn profit. That said, many investors are hesitant to invest in blockchain technology as a result of the technology’s relationship with the volatile cryptocurrency market.

However, blockchain is not similar to cryptocurrencies, and blockchain ETFs invest exclusively in the stocks of regulated companies, most of which are large blue-chip technology companies, rather than in cryptocurrency directly.

Investment objective of the fund

The Invesco India – Invesco Elwood Global Blockchain Fund of Fund (FoF) aims to earn a return by investing primarily in Invesco Elwood Global Blockchain UCITS ETF units. This international exchange-traded fund seeks to replicate the performance of the Elwood Blockchain Global Equity Index (the “Reference Index”) less fees, expenses, and transaction costs.

The Scheme’s investments will be concentrated in the Underlying Fund, and the Scheme’s performance, risk profile, and liquidity will be directly connected to those of the Underlying Fund.

-Any change in the underlying fund’s investment policies or fundamental characteristics may affect the scheme’s performance.

-Investments in the underlying fund, which is an overseas exchange-traded fund, will involve all of the risks associated with equity investments, foreign markets, and currency exchange risk, among others.

What should investors know?

-The scheme offers two plans, i.e., a regular plan and a direct plan

-There is no entry load and exit load. However, a switch-out or a withdrawal under a systematic withdrawal plan (SWP) might attract an exit load.

-The scheme falls under the ‘Very High’ risk category, and investors should consult their financial advisors to check the product suitability.

-Minimum application amount is Rs 1,000 per application and in multiples of Re 1 thereafter.

-The fund house is yet to announced its new fund offer opening and closing dates.

As per the NITI Aayog report on blockchain in India, it has emerged as a potentially transformative force in various aspects of public and commercial sector activities. Its potential has been recognised globally, with a number of international organisations and technology businesses stressing the benefits of its implementation in terms of cost savings, compliance, and efficiency improvements.