Few industries have experienced such stratospheric growth and widespread adoption as digital technology— and even fewer have warranted to have the title of their own “economy” attached to it. Make no mistake, the digital economy is real and still growing, both in the depth and breadth of use cases. Additionally, COVID-19 seems to have sped up adoption and use of the digital economy in a lot of ways, but what will it look like in the long term?
In the last decade, the rate of change and innovation in the digital ecosystem has been remarkable. Businesses and consumers alike, have become users and avid fans of many digital products, many of which would not have been possible. From quick and easy digital payments and transfers to advanced security applications through blockchain technology, it seems like the digital world is expanding every moment.
New Industries are Being Forged
Five years ago, if you knew about cryptocurrency mining you would be among a rather small group – now there is a billion-dollar industry dedicated solely to providing the equipment to mine cryptocurrency. Things change fast, and the digital economy has also changed and expanded in many unforeseen and unique ways.
Cryptocurrency and blockchain technology have experienced growth, but can be seen as volatile, risky, and uncertain as an investment. However, for the individual with a bullish hypothesis, regarding these industries, there are now a myriad of ways to invest rather than simply buying bitcoin or ethereum. VanEck, an investment firm, is on the frontlines of this new industry.
Buying Into the Broad Scope of Digital Transformation
Purchasing individual shares of companies or cryptocurrencies certainly may work for some, but indexing is an extremely popular way to help reduce risk and diversify holdings. The DAPP VanEck Vectors Digital Transformation ETF is one example of an indexed ETF that is based upon the MVIS Global Digital Assets Equity Index, and focuses on a bullish outlook for the digital economy and its ongoing growth and value trajectory. According to VanEck ETF Product Manager John Patrick Lee, “DAPP is providing exposure to companies that are participating in the digital asset economy… This ETF is providing comprehensive exposure to the industry in a passive, rules-based format.” This provides investors with an opportunity to gain exposure to a variety of players in the field, including cryptocurrency miners, digital asset exchanges, hardware manufacturers, and more, while retaining diversification and a long-term value approach to the technology of the future.
Many investors have watched in amazement from the sidelines, seeing the digital asset industry grow to record heights, particularly during this past year. Narrowing in on companies and coins that are powering the future of the digital economy is one way to do things, but for those looking for broad exposure to the industry, an indexed and diversified approach like DAPP might make sense.
The Fund will not invest in digital assets (including cryptocurrencies) (i) directly or (ii) indirectly through the use of digital asset derivatives. The Fund also will not invest in initial coin offerings. Therefore the Fund is not expected to track the price movement of any digital asset.
Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Therefore, you should consider carefully various risks before investing in the Fund, each of which could significantly and adversely affect the value of an investment in the Fund.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in digital transformation companies, investing in equity securities, Canadian issuers, small- and medium-capitalization companies, information technology and financials sectors, foreign securities, market, operational, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risks which may make these investments volatile in price or difficult to trade. Small- and medium-capitalization companies may be subject to elevated risks.
The technology relating to digital assets, including blockchain, is new and developing and the risks associated with digital assets may not fully emerge until the technology is widely used. Digital asset technologies are used by companies to optimize their business practices, whether by using the technology within their business or operating business lines involved in the operation of the technology. The cryptographic keys necessary to transact a digital asset may be subject to theft, loss, or destruction, which could adversely affect a company’s business or operations if it were dependent on the digital asset. There may be risks posed by the lack of regulation for digital assets and any future regulatory developments could affect the viability and expansion of the use of digital assets.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
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