Empowered files for Ark and 21Shares-branded bitcoin futures ETFs

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Empowered Funds has filed to launch three bitcoin futures ETFs that will use the Ark Invest and 21Shares brands in their names.

Although the ETFs will use the 21Shares and Ark brands, those two firms will function as the funds’ subadviser and sub-subadviser, respectively.

Empowered, a subsidiary of Alpha Architect doing business as EA Advisers, will serve as the funds’ adviser.

The Ark 21Shares Active Bitcoin Futures ETF will invest primarily in bitcoin futures traded on the Chicago Mercantile Exchange.

The ETF will also serve as the underlying ETF in two other bitcoin-related ETFs.

The Ark 21Shares Active On-Chain Bitcoin Strategy ETF will invest at least 25 per cent of its assets in the Digital Asset and Blockchain Strategy ETF, its prospectus shows.

The on-chain ETF will use a proprietary trend indicator model to adjust its allocation strategy, depending on whether the bitcoin market trend is bullish or bearish.

According to the prospectus, under bullish conditions, the ETF can invest 100 per cent of its assets in the underlying ETF.

Under bearish conditions, the fund will invest up to 75 per cent of its assets in US Treasury securities, money market instruments and repurchase agreements.

Depending on the model’s trend assessment, the ETF’s investment team will adjust the fund’s exposure to bitcoin futures, the filing shows.

The ETF’s investment team will lean on the model but will have full discretion in determining the active ETF’s allocation to bitcoin futures.

Meanwhile, the Ark 21Shares Digital Asset and Blockchain Strategy ETF will invest in the underlying ETF along with “investments that provide exposure to digital assets and in companies engaged in the blockchain, digital asset, technology and fintech industry”, its prospectus says.

That ETF can have up to an 80 per cent allocation to the bitcoin futures ETF or other assets and can invest up to 20 per cent of its assets in cash or cash equivalents, such as Treasuries, and in real estate investment trusts.

Fees for the ETFs were not disclosed.

21Shares co-founder and president Ophelia Snyder will serve as portfolio manager on the funds, according to the filings.

Ark and 21Shares may be looking to diversify their range of bitcoin ETFs and could be attempting to launch their own futures ETF to use within their other ETF strategies, said Roxanna Islam, associate director of research at VettaFi.

“While current news has revolved around spot bitcoin ETF filings, realistically there may still be a long time to approval,” she said. “It seems that Ark is trying to make use of current resources and continue to expand its current line-up of crypto funds, while keeping its eye on the goal of a spot bitcoin ETF.”

The two managers filed to launch a spot bitcoin ETF in April, but the Securities and Exchange Commission last week postponed its decision on whether to approve the ETF.

Ark amended its spot bitcoin ETF filing in June, following a slew of similar filings from large managers such as BlackRock, Fidelity and Invesco.

Empowered Funds’ parent company Alpha Architect offers 15 ETFs with $1.9bn in assets as of July 31, according to data from Morningstar Direct.

Investors piled $717mn into those funds in the year to that date.

*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignites.com.