State Street Unveils Galaxy-Managed Digital Asset ETFs
State Street Global Advisors (SSGA) has introduced three actively managed ETFs focused on digital assets and disruptive technologies, sub-advised by Galaxy Asset Management.
The new offerings will target companies involved in blockchain, cryptocurrency and other emerging technologies, according to a press release announcing the funds.
“Digital assets and blockchain technology have the power to transform financial markets as well as the economy over the next decade, and a number of companies will grow and flourish thanks to their contribution to this transformative technology,” said Anna Paglia, SSGA chief business officer, said in the release.
The ETFs debut as issuers try to address strong demand for crypto-focused investment products following the success of spot bitcoin ETFs, which have generated nearly $17 billion in inflows since they started trading in January.
The SPDR Galaxy Digital Asset Ecosystem ETF (DECO) focuses on companies benefiting from blockchain and digital asset adoption, including cryptocurrency exposures through ETFs and futures, according to Matt Bartolini, head of Americas research at SPDR.
“DECO is going to try to hold the whole entire ecosystem of companies that Galaxy deems to be on the leading edge of the digital asset ecosystem for some of that long-term capital appreciation,” Bartolini told etf.com in an interview.
The SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO) offers similar exposure but incorporates an options overlay to manage volatility, Bartolini said.
Meanwhile, SPDR Galaxy Transformative Tech Accelerators ETF (TEKX) targets the “infrastructure, the backbone of what makes up those digital asset technologies,” Bartolini said.
Digital Asset Innovation
The partnership combines State Street’s ETF expertise with Galaxy’s digital asset knowledge, Bartolini said.
“Galaxy, they're a global leader in digital assets,” Bartolini said. "They have a diversified business across different digital asset industries, whether it's within blockchain, offering institutional grade financial services, developing blockchain infrastructure, mining, you name it. I think they've been one of the leaders in the overall global digital economy.”
Bartolini cautioned that the nascent industry remains volatile and that ETFs will be concentrated in single stocks and specific industries, leading to idiosyncratic risks.
HECO aims to manage some of this volatility for clients seeking digital asset exposure with potentially less risk than DECO’s pure approach, Bartolini added.