Harvest HBLK ETF Review (Oct 2022): Blockchain Investment

Also known as distributed or decentralized ledger technology, blockchain technology was made popular by the advent of cryptocurrencies.

Investors looking to invest in individual stocks involved with blockchain technology might find it challenging to make the right picks for their investment portfolios.

Blockchain exchange-traded funds (ETFs) can provide you with exposure to a diversified basket of securities. This Harvest HBLK ETF review can help you figure out if it will be the right fit for your portfolio.

Our Verdict
Harvest HBLK ETF Review 2021
8/10Our Score

Harvest HBLK ETF

Invest In Blockchain Technology

Gain diversified exposure to a basket of large-cap established companies and standalone blockchain companies through an ETF that tracks the Harvest Blockchain Technologies Index.

Pros
  • Low-cost ETF
  • World’s first blockchain technology ETF
  • Diversified exposure to blockchain-related businesses
Cons
  • Very volatile industry

What Is Harvest HBLK ETF?

Harvest Blockchain Technologies ETF (HBLK) is a fund launched in 2018, and it stands tall as the world’s first blockchain ETF.

The fund tracks the performance of the Harvest Blockchain Technologies Index, investing in equity securities of companies that develop and implement blockchain technology, either directly or indirectly.

A purely equity-centric fund, Harvest HBLK ETF carries a relatively higher degree of capital risk compared to funds that also diversify into other sectors and fixed-income assets.

HBLK.TO is currently trading at close to $11.

HBLK Key Facts

As of Dec 31, 2021:

  • Ticker Symbol: HBLK.TO
  • Exchange: Toronto Stock Exchange
  • Assets Under Management: $29.24 Million (As of Aug 18, 2022)
  • MER: 0.98%
  • Currency Traded: CAD
  • Registered Accounts Availability: Yes

Harvest HBLK ETF MER And Fees

The management fee for Harvest HBLK ETF is 0.65%, and its Management Expense Ratio stands at 0.98%. Despite being a passively managed fund, Harvest HBLK ETF does charge a higher fee and MER than most low-cost ETFs.

Harvest HBLK Dividend Yield

Harvest HBLK ETF does not offer much in terms of shareholder dividends like many other ETFs.

As of December 31, 2021, its annualized distribution yield is 0.00% since it did not distribute any shareholder dividends. The fund has yet to distribute any dividends since its inception.

Harvest HBLK ETF Performance And Returns

Since Harvest HBLK ETF tracks the performance of the Solactive Harvest Blockchain Technologies Index, it is easy to see that the fund’s performance is virtually identical to the underlying index.

The chart below shows a hypothetical performance of $10,000 invested in the fund since its inception.

As of July 31, 2022:

Ticker1M3M6MYTD1Y2Y3Y4YSI
HBLK21.16(21.54)(39.07)(49.41)(53.28)(2.23)17.5610.432.89
Source: Harvestportfolios.com

Go to the Harvest website for real-time performance numbers of HBLK.

What Does Harvest HBLK ETF Invest In?

Harvest HBLK ETF tracks the Solactive Harvest Blockchain Technologies Index. The underlying index focuses on leading publicly listed companies that have business activities focused on blockchain technology throughout North America.

As of July 29, 2022, Harvest HBLK ETF holds 55 equity securities. The fund invests some of its assets in large market capitalization companies that have an indirect involvement in the development and implementation of disruptive technology.

Considering the early stage of the technology, the underlying fund is designed to transition to transform from a combination of established blockchain tech companies and dedicated blockchain companies into being focused entirely on the dedicated blockchain segment as the sector develops and grows.

Harvest HBLK ETF Asset Allocation

Asset classes HBLK is invested in:

Asset ClassInvestmentCategoryIndex
Canadian Equity9.8214.893.17
U.S. Equity83.2869.5559.28
International Equity6.6612.9537.50
Fixed Income0.000.000.00
Other0.000.490.05
Cash0.257.000.00
Source: Morningstar.com
HBLK Blockchain Industry Allocation
Source: Harvestportfolios.com

Harvest HBLK ETF Top Holdings

This section of my Harvest HBLK ETF review will discuss the top holdings for the fund.

Harvest HBLK ETF focuses on investing in companies with business involvement with blockchain technology.

As of July 29, 2022, its top holding is EPAM Systems, Inc., accounting for 9.8% of its asset allocation. Silvergate Capital Corporation comes in second with a 9.1% asset allocation, and Akamai Technologies, Inc. accounts for 8.8% of its asset allocation.

Nuvei Corp. is the only Canadian equity security among its top ten holdings.

NameTickerWeightSectorCountry
EPAM Systems, Inc.EPAM US9.8%Software/ Tech ServicesUnited States
Silvergate Capital CorporationSI US9.1%Digital Assets & ServicesUnited States
Akamai Technologies, Inc.AKAM US8.8%Software/ Tech ServicesUnited States
Coinbase Global, Inc.COIN US8.8%Crypto Trading/ WalletsUnited States
Block, Inc.SQ US8.1%Crypto Trading/ WalletsUnited States
DocuSign, Inc.DOCU US7.7%Other BlockchainUnited States
Nuvei CorporationNVEI CN5.8%Payment ProcessorsCanada
Marathon Digital Holdings, Inc.MARA US4.2%Crypto MinersUnited States
Overstock.com, Inc.OSTK US3.2%Other BlockchainUnited States
Riot Blockchain, Inc.RIOT US2.7%Crypto MinersUnited States
Source: Harvestportfolios.com

Harvest HBLK ETF Sector Weighting

SectorsInvestment %Cat %
 Basic Materials0.001.78
 Consumer Cyclical3.204.28
 Financial Services24.162.15
 Real Estate0.000.28
 Communication Services0.137.07
 Energy0.002.07
 Industrials0.232.83
 Technology72.2930.12
 Consumer Defensive0.002.27
 Healthcare0.0035.96
 Utilities0.0011.19
Source: Morningstar.com

Harvest HBLK ETF Risk Indicator

Harvest HBLK ETF carries a high-risk rating.

HBLK ETF Risk Indicator

Harvest HBLK ETF Alternatives

HBLK Vs. BLOK

Amplify logo

BLOK is an actively managed ETF issued by Amplify ETFs that seeks to provide its investors with a total return by investing at least 80% of its assets in equity securities of companies with active business involvement in developing and implementing blockchain technologies.

Unlike Harvest HBLK, BLOK ETF does not track the performance of an index. However, it comes with a lower MER of 0.71% compared to 0.98% for HBLK ETF. BLOK provides more geographical diversification

BLOK ETF also provides significant exposure to the cryptocurrency world by allocating 24% of its funds to cryptocurrency mining companies, making it a riskier investment than HBLK ETF.

HBLK Vs. HBGD

horizons logo

Horizons HBGD ETF is a passively managed fund, similar to Harvest HBLK ETF. Issued by Horizons ETFs, HBGD ETF seeks to track the performance of the Solactive Big Data & Hardware Index, net of expenses.

The underlying index tracks a globally diversified portfolio of companies that focus on data development, storage, and data management-related services and solutions. It also focuses on companies that offer hardware and hardware-related services that are used in data-intensive applications like blockchain technology.

Horizons HBGD comes with an MER of 0.55%, making the fund significantly more affordable than HBLK ETF, and it offers global diversification. Harvest HBLK ETF does not diversify outside of North American publicly listed companies.

It could be a viable alternative to HBLK ETF if you seek geographical diversification and lower-cost exposure to blockchain-related companies.

How To Buy Harvest HBLK ETF In Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
Qtrade
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  • Top-notch market research tools
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Low Fees
Wealthsimple Trade
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
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Well-Rounded
Questrade
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada.

Our Final Verdict: Is Harvest HBLK A Good Investment For You?

Blockchain technology undoubtedly has far more utility beyond the cryptocurrency world that brought distributed ledger technology to the mainstream.

The revolutionary technology is changing the world by facilitating better record-keeping and smart contracts, as its architecture does not rely on centralized nodes.

The technology’s enthusiasts claim that it can reduce overall transaction costs while decentralizing the ecosystem of an industry. While the thesis remains to be proven in several industries, the potential is there.

Harvest HBLK ETF provides you with exposure to equity securities involved directly or indirectly with the implementation and development of the new technology. If you have a bullish long-term view of blockchain technology, it could be a viable long-term investment for you to consider.

If you are interested in getting more diversified exposure to tech-related ETFs, my guide to the best tech ETFs In Canada lists down some of the top low-cost ETFs that you could consider.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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