US investment firm launches meta-ETF, first NFT focused fund

By Raffaele Redi

The exchange traded fund provides investors with exposure to publicly-listed NFT companies

Playboy front cover featuring a woman licking a representation of a Satoshi stamp                                 
Playboy is the only group so far linked with the non-fungible token focused exchange traded fund launched by Defiance ETFs – Photo: niftygateway.com
                                

The US exchange traded funds (ETFs) sponsor and investment adviser Defiance ETFs has launched the first non-fungible token (NFT) focused ETF, Defiance’s NFTZ.

The company said the ETF is aimed at providing investors with diversified exposure to “a sector with potential for significant disruption”.

NFTZ is a rules-based, passively managed ETF that tracks an index consisting of a portfolio of publicly-listed companies with exposure to NFTs, blockchain and cryptocurrency ecosystems, or the metaverse.

“In some ways, NFTZ could be seen as a meta-ETF. But whether its metaverse stocks or an NFT fund investors are after, NFTZ is the first ETF to bring the NFT space within easy reach of retail and institutional investors,” announced the company.

What’s the ETF’s coverage?

Currently, the fund mostly covers crypto mining giants, such as HIVE Blockchain, Hut 8 Mining Corp, Bitfarm and Marathon, along with other big crypto players including Northern Data AG.

As for now, the only group directly linked to NFTs covered by the ETF is Playboy, which is dropping its collection alongside the popular NFT characters, the Rabbitars.

According to Defiance ETFs, companies that are eligible for inclusion are those that have made publicly disclosures through regulatory filings that they operate services for the issuance, creation, and commercialisation of NFTs – or they are investing in the metaverse, for example companies that are producing sports, music, film or collectable NFTs.

The index does not cover NFTs directly

The index does not include or invest directly in NFTs or private or public funds that invest in NFTs. Instead, it includes the common stock of companies with exposure to the NFT ecosystem, for example, companies providing services related to NFTs or which directly own NFTs.

“As the fund will not invest directly in NFTs or private or public funds that invest in NFTs, it will not track price movements of any individual or collection of NFTs,” said Defiance ETFs.

In its prospectus filed with the US Securities and Exchange Commission, Defiance stressed the fund will not invest in initial coin offerings and cryptocurrencies directly or through the use of derivatives.

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