ECO-FRIENDLY EXCHANGE TRADED FUND
Who has launched this ETF?
The Viridi Fund has launched an ecological exchange traded fund . The Viridi Fund is a registered investment advising firm whose aim is to promote modern investing with an environmental focus. The firm believes that investors should have access to financial products that reflect their values.
What do you need to know about this ETF?
The Viridi firm has launched the first ecological exchange traded fund named the ‘Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF that focuses on investments within the cryptocurrency mining industry. The ETF was listed on the New York Stock Exchange (NYSE) on July 20th, 2021. “RIGZ” is the ticker under which the ETF is listed.
The fund has clearly mentioned that it will not take exposure to cryptocurrencies directly. Instead, the fund’s portfolio managers will invest in equity shares of companies which are market participants mining cryptocurrencies themselves. The fund managers will also take into account ecological factors such as energy consumption, carbon footprint before investing in those companies.
The fund will decide which companies to invest in on the following basis:
1. The company passes the clean energy criteria.
2. The company derives a major portion of its profits or invests most of its net assets in cryptocurrency mining operations.
The fund will invest in companies related to mining and semiconductor industries which manufacture circuit boards, appliances which are crucial for crypto mining.
What type of securities will the fund invest in?
The fund will look to invest in the U.S equity securities and non-U.S equity securities in the developed markets. The prospectus of the fund states that under normal market conditions, the fund will own securities of about 15 to 30 companies. The company can also invest in newly issued securities after an initial public offering at its discretion.
The fund also outlines that it does not consider the market capitalization of a company while investing in it. It will be free to invest in even micro-cap companies having a market capitalization less than $300 million.
What are its current constituents?
The fund has made a number of investments which these include companies: Advanced Micro Devices Inc, Argo Blockchain PL, Bit Digital Inc, Bitfarms ltd, Cleanspark Inc, Digihost technology Inc, DMG Blockchain Inc, CN Galaxy Digital Holdings Inc, Hive Blockchain Technologies, Hut 8 MNG Corporation, Marathon Digital Holdings Inc, Northern Data AG, NVIDIA Corporation, Riot Blockchain Inc, Samsung Electronics, Semiconductor MFG, Skychain Technologies Inc, TAAL distributed information and TSM Taiwan Semiconductor.
Are there risks involved?
Yes, every investment carries risk and so does this ETF. There are many risks involved even though their investments are diversified. Investors may lose their money if the price of the ETF falls due to the volatility in the cryptocurrency market.
Cryptocurrency markets carry certain risks. The fund will invest in companies using or producing technology to mine crypto assets. However, the technology may not be as effective and may not be adopted on a large scale due to which the value of the investment may fall.
Due to decentralization, the forces of demand and supply affect their valuations rather than government intervention . Thus, a phenomenon of excess demand or excess supply may significantly impact the value of the ETF.
Furthermore, any future policies laid out by the government or the Securities and Exchange Commission can negatively impact the cryptocurrency market.
The failure or malfunction of any technology that the fund supports may tamper with its value.
Thus, investors must take into consideration all these factors before trading or investing in this ETF.
What are the benefits of this ETF?
This exchange traded fund mitigates the risk of directly investing in cryptocurrencies. Investors can gain access to the cryptocurrency market indirectly. Instead of purchasing cryptocurrencies, they can invest in companies responsible for the existence of cryptocurrencies in a diversified manner.
Moreover, they can promote environmental safety while earning profits from their investments. They can do so as the fund intends to invest in companies based on their ecological conservation methods.
Furthermore, the fund’s expense ratio is 0.90%. Thus, investors can have 99.10% of their profits and will only have to deduct 0.90% as fees.
The exchange traded fund will boom within a few years and so will the company as well as its investors!