Finance
Why the new spot ether ETFs may ‘be a hit’ despite recent weakness
It’s a historic week for the cryptocurrency markets with spot ether exchange-traded funds making their debut.
Franklin Templeton is one of the nine spot ether ETF applicants which got approval Tuesday from the Securities and Exchange commission.
The firm is behind the Franklin Ethereum ETF (EZET) — now down about 10% since its inception as of Thursday’s close. The losses were sparked by the sell-off in cryptocurrencies.
“We think they’ll be a hit. Whether they’re going to get the same amount of assets is… probably unlikely,” said David Mann, the firm’s head of ETF product and capital markets, told CNBC’s “ETF Edge” on Tuesday. “But it’s still pretty awesome.”
VanEck, a global investment manager, is behind the VanEck Ethereum ETF (ETHV) which also got approval.
CEO Jan Van Eck expects spot ether ETFs will help investors diversify, but he sees a different energy level for spot ether ETFs.
“I don’t think they’re going to be the same, same kind of hit [as spot bitcoin ETFs]” Van Eck said.
His new fund is also down sharply since Tuesday.
Long-term, Morningstar’s Ben Johnson considers the volumes for spot ether ETFs as normal because they’re roughly proportional to the relative market cap of ether versus bitcoin.
“There’s healthy appetite. There’s healthy volume. There’s healthy demand there,” the research firm’s head of client solutions said. “[The ETFs are] opening up access to new markets, new portions of the investment opportunity set for investors and putting that in a package that is cost effective. It’s convenient, and it’s compatible with the way that more investors are building their portfolios these days.”
Ether dropped sharply on Thursday. As of the market close, it’s down about 11% for the week. However, ether is still up 38% so far this year.
Money manager John Davi is positioning for challenges tied to President-elect Donald Trump’s tariff agenda.
Davi said he worries the new administration’s policies could be “very inflationary,” so he thinks it is important to choose investments carefully.
“Small-cap industrials make more sense than large-cap industrials,” the Astoria Portfolio Advisors CEO told CNBC’s “ETF Edge” this week.
Davi, who is also the firm’s chief investment officer, expects the red sweep will help push a pro-growth, pro-domestic policy agenda forward that will benefit small caps.
It appears Wall Street agrees so far. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, is up around 4% as of Friday’s close.
Davi, whose firm has $1.9 billion in assets under management, also likes staying domestic despite the tariff risks.
“We’re overweight the U.S. I think that’s the right playbook in the next few years until the midterms,” added Davi. “We have two years of where he [Trump] can control a lot of the narrative.”
But Davi plans to stay away from fixed income due to challenges tied to the growing budget deficit.
“Be careful if you own bonds for sure,” said Davi.
Since the election, the benchmark 10-year Treasury yield is up 3% as of Friday’s close.
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