BKCH: Lagging Peers And Overly Concentrated

Summary The Global X Blockchain ETF is an active fund designed to provide investors exposure to companies that are involved in ‘blockchain’ technology. With $113 million in AUM and a 0.50% expense ratio, BKCH is competitive with similar products offered by Fidelity and VanEck. BKCH has a high turnover ratio and a 37% allocation to the top 3 stocks in the fund. In my view, the fund’s holdings need tweaking. BKCH has a high reliance on Bitcoin mining stocks, and crypto pure plays like Exodus Movement and Coincheck aren’t in the fund at all. The Global X Blockchain ETF ( BKCH ) is an actively managed fund that offers investors exposure to companies that stand to benefit from blockchain technology innovation. Some of the ways the fund builds that exposure is through publicly listed equities that touch blockchain technology either through digital asset transactions, cryptocurrency mining, mining hardware, or integration with blockchain networks. In my initial coverage of BKCH, we’ll look at fund details compared to peers, holdings, and whether I personally think the ticker is one to consider for investment. BKCH Details There are really only a handful of ETFs that I have come across that have attempted to build a ‘blockchain’ fund as a theme. While this isn’t an exhaustive list, I see the closest natural peers for BKCH as the Fidelity Crypto Industry and Digital Payments ETF ( FDIG ), the VanEck Digital Transformation ETF ( DAPP ), and the iShares Blockchain and Tech ETF ( IBLC ). The latter of which is the smallest at just $27.3 million in AUM. Blockchain ETFs BKCH FDIG DAPP IBLC Issuer Global X Funds Fidelity Investments VanEck iShares Inception 07/12/2021 04/19/2022 04/12/2021 04/25/2022 Expense Ratio 0.50% 0.40% 0.51% 0.47% AUM $113,160,512 $132,467,749 $133,702,510 $27,296,737 Source: Seeking Alpha, AUM as of 4/15/25 Fee-wise, the funds are all very close though FDIG is cheapest. But at 50 basis points, I don’t think BKCH is terribly overpriced for an actively managed fund. However, the fund is very concentrated in top stocks and only has about two dozen positions. Blockchain ETFs BKCH FDIG DAPP IBLC Number of Holdings 25 53 22 48 Assets in Top 10 74.8% 68.5% 62.9% 66.4% Turnover 56.4% 53.0% 57.0% 81.0% Source: Seeking Alpha, as of 4/15/25 The Global X Blockchain ETF has a similar turnover ratio to FDIG and DAPP at a little over 56% and has less holdings than FDIG at just 25. Perhaps the biggest thing that separates BKCH from the rest of the pack is the concentration in the fund’s top 10 holdings. At just under 75% of assets in the top 10 holdings, this is a fund that I’d call reliant on its top stocks. ETF Grades BKCH FDIG DAPP IBLC Momentum F D- F F Expenses C+ B- C+ C+ Dividends A- F D- C+ Risk F F F F Liquidity C C+ B F Source: Seeking Alpha, as of 4/15/25 One thing that is interesting is the fund gets an ‘A+’ Dividend grade from Seeking Alpha while the other funds are well below that. At 11.5%, BKCH has a very high trailing twelve month yield. The TTM yield on DAPP is 6.3% and IBLC paid out 2.2% over the last year. Performance vs The Peer Group Data by YCharts Since three of these funds are actively paying dividends, it’s important to look at the performance of the funds through the total return rather than just the share price performance. From a total return standpoint, these ETFs have all had generally awful starts to 2025: Data by YCharts At a 34% negative total return, BKCH is closer to the worst performer of the peer group shown above. The 1-year performance is also quite poor with BKCH standing out as the clear laggard of the group: Data by YCharts With all of these funds generally sharing similar themes and 12 month trends, it ultimately comes down to where the major allocations are to discern what might explain the underperformance of BKCH relative to the other funds. Holdings Breakdown Before we get into the deeper BKCH breakdown, I wanted to look at the top 3 assets for each fund as well as the allocation to those top three positions. For ease of reading the table, I’m keeping it to just the tickers. The unique stocks that make it into these top 3 positions are the following: Coinbase Global ( COIN ) MARA Holdings ( MARA ) Riot Platforms ( RIOT ) CleanSpark ( CLSK ) Strategy ( MSTR ) Block, Inc ( XYZ ) Unsurprisingly, there are a lot crypto-focused companies and Bitcoin ( BTC-USD ) mining stocks. Three of the funds have top equity exposure to Coinbase: Top 3 Stocks BKCH FDIG DAPP IBLC 1st COIN COIN MSTR COIN 2nd MARA MARA COIN MARA 3rd RIOT CLSK XYZ RIOT Top 3 Weighting 37.0% 25.0% 25.4% 30.8% Source: Seeking Alpha, as of 4/15/25 I should note that this table puts COIN as FDIG’s top position, but FDIG actually has 23.8% of AUM in the income-based Fidelity Securities Lending Cash Central Fund. Which could possibly disqualify that fund from consideration entirely since it might not make sense to pay Fidelity 40 basis points to put a quarter of the fund’s assets in T-bills. The flip side of that coin is perhaps FDIG is better insulated from drawdowns – and we can certainly see that reflected in FDIG’s relative outperformance year to date. Here’s the full asset breakdown for BKCH specifically: BKCH Holdings 4/14/25 (Global X ) 57.4% of the fund is allocated to Bitcoin mining stocks. To me, that seems like a large allocation. For an actively managed fund, I think there can/should be more discernment regarding what is included in a ‘blockchain’ ETF. In my opinion, there are some fairly notable omissions from this fund that I would think would fit with the overall thesis of businesses using blockchain. Some examples of publicly traded companies that I’m surprised didn’t make it in the fund would be Exodus Movement, Inc. (NYSE: EXOD ), Fold Holdings Inc. (NASDAQ: FLD ), and Coincheck Group N.V. (NASDAQ: CNCK ). Furthermore, Ethereum ( ETH-USD ) mining with GPUs produced by NVIDIA ( NVDA ) ended over 2.5 years ago. That BKCH has almost as much exposure to NVDA as it does to a company like Bit Digital ( BTBT ) seems off base for a ‘blockchain’ fund. Closing Thoughts I think investors who want exposure to ‘blockchain’ as an idea can probably do better picking their own stocks. Beyond direct buys of Coinbase, MARA Holdings, and maybe Galaxy Digital ( GLXY:CA )( OTCPK:BRPHF ), there are a lot of companies in this fund that investors can likely pass on if they want to play the ‘blockchain’ ponies. Even something like EXOD, which I’m not actually bullish, makes more thematic sense than some of the other companies included in BKCH. At the end of the day, it’s a fund with a lot of capital allocated to a handful of crypto-adjacent stocks and a high reliance on a mining sector that faces long term economic challenges. For me, BKCH is a ‘hold.’

Source: Seeking Alpha