Summary: Web3 exchange-traded funds (ETFs) have emerged as an attractive option in the evolving world of digital assets, providing investors exposure to companies at the forefront of Web3 technology that focuses on decentralized protocols and infrastructure built on blockchain technology. In the following paragraphs, we’ll go over a couple of the best Web3 ETFs to invest in 2024 and potentially benefit from the growth of blockchain-based networks and services. The ETFs on our list are available on online brokerages such as Interactive Brokers.
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What are Web3 ETFs?
Web3 ETFs
With a Web3 ETF, you have the opportunity to invest in multiple companies shaping the future of the internet at once while relying on investment professionals to manage the fund’s holdings. Thus, Web3 ETFs can be a compelling addition to your investment portfolio, no matter whether you’re a seasoned investor or a novice in the world of cryptocurrencies and decentralized applications.
In other words, by selecting a well-managed ETF, you can gain broad exposure to the companies driving innovation in this rapidly evolving space, all within a familiar and accessible investment vehicle.
Best Web3 ETFs to invest in 2024
In 2024, some of the top Web3 ETFs to consider for your investment portfolio are:
- Bitwise Web3 ETF (BWEB);
- SoFi Web3 ETF (TWEB).
Note
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
1. Bitwise Web3 (BWEB)
Bitwise Web3 ETF (BWEB): This ETF follows the Bitwise Web3 Equity Index and provides focused exposure to up to 40 companies in the sector, including Coinbase, Meta, and Roblox. BWEB has attracted a significant amount of interest due to its carefully selected holdings and its potential for high returns. It has grown around 61% in the last year (as of December 2023), has an expense ratio of 0.85%, and has $927,000 in net assets.
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2. SoFi Web3 (TWEB)
SoFi Web3 ETF (TWEB) is another promising Web3 ETF. It offers comprehensive and diversified exposure to various companies and sectors within the broad Web3 ecosystem, including Coinbase and Nvidia. With a competitive net expense ratio and a strong track record, TWEB is a solid choice for investors looking to gain exposure to the Web3 space. The ETF has an expense ratio of 0.59%, no minimum initial investments, and around $1.8 million in assets under management.
BWEB price today
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Where to trade Web3 ETFs?
Both ETFs on our list are available on online stock trading platforms such as Interactive Brokers, which boasts millions of active users and trading features such as:
- Global stock-trading on 90+ market centers;
- Fractional shares;
- No minimum deposits;
- Charting tools;
- Additional income on fully paid shares;
- Lowest financing rates for margin accounts.
Note
3 Web3 Companies to Invest in 2023.
What to consider before investing
While Web3 ETFs provide a more convenient method of investing in the Web3 space, it’s essential to do your research and understand the potential risks involved. Due diligence is crucial. That is, you will have to read up on the underlying assets and carefully evaluate each fund’s exposure to various sectors and companies. Additionally, consult with a financial advisor, use a reputable brokerage platform, and closely monitor the market price and overall performance of your chosen Web3 ETF.
Before investing in any Web3 ETF, you should consider several factors, such as:
- ETF’s track record: Examine how the ETF has performed in the past. However, keep in mind that past performance does not guarantee future results;
- Assets under management (AUM): A larger AUM can indicate a more popular and well-established ETF, providing some measure of stability;
- Expense ratio: Look for ETFs with low expense ratios. High expenses can erode your investment returns over time;
- Sector focus: Some Web3 ETFs may focus on specific sectors, like blockchain or decentralized finance. Make sure the ETF aligns with your investment strategy;
- Shares Outstanding: Be mindful of the total shares outstanding of the Web3 ETF as it can impact the trading volume and liquidity of the ETF;
- Equity Securities Approach: Web3 ETFs may invest in various types of equity securities, focusing on factors like market capitalization, growth potential, and value indicators.
Why invest in Web3 ETFs?
As an investor, you might be considering the potential of Web3 ETFs for your investment strategy. Web3 technology, which encompasses blockchain, cryptocurrencies, and the metaverse, is driving a new wave of innovation, so investing in Web3 ETFs allows you to gain exposure to a diverse range of companies and provides you with benefits such as:
- Diversification: Web3 ETFs can include stocks from various companies in different sectors, reducing the risk associated with investing in a single company or sector;
- Professional Management: With ETFs, your investments are overseen by investment professionals who handle portfolio management, analysis, and other tasks, allowing you to benefit from their expertise;
- Liquidity: Shares of ETFs are traded on stock exchanges, making it easy for you to buy and sell your investments;
- Category Exposure: Web3 is a broad term that includes several categories, such as cryptocurrencies, decentralized finance (DeFi), and non-fungible tokens (NFTs). Web3 ETFs can help you tap into multiple categories within the space.
Risks and challenges with Web3 ETFs
As you consider investing in Web3 ETFs, it’s important to be aware of the risks and challenges that may be associated with this new and developing sector. One of the primary risks associated with Web3 ETFs is their exposure to the still-evolving blockchain and cryptocurrency industries. These industries are young and can, thus, be more volatile because the technology and regulatory environment surrounding it are prone to rapid changes.
Considering ETF performance, it is vital to note that its ability to track the underlying index can be impacted by various factors such as fees, expenses, and market forces. The net expense ratio for an ETF covers the fees and expenses before the fund’s returns. So, it is critical to compare this expense ratio to other similar investment options on the market.
Another challenge with ETFs is the potential disparity between the market price and the Net Asset Value (NAV). This difference could lead to the ETF trading at a premium or a discount, so keep that in mind when initiating or exiting positions.
General risks
In addition to the specific risk factors related to the Web3 sector, investors need to consider risks associated with investing in ETFs in general. Some of them include:
- Market risk: The ETF’s performance might be affected by broader market trends, the state of the economy, etc.;
- Brokerage commissions: When trading ETFs, you might have to deal with encounter brokerage commissions, which could erode your returns in the long run;
- Currency risk: If the underlying assets of the ETF are denominated in foreign currencies, you might see fluctuations in the ETF’s NAV due to currency exchange rates.
To mitigate these risks and make an informed decision, stay updated on the latest news and developments in the Web3 space. Diversifying your investments across various sectors and asset classes could also help in spreading the risks associated with your investments.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about Web3 ETFs
What is a Web3 ETF?
A Web3 ETF is an exchange-traded fund tracking the performance of companies involved with Web3 technologies and promoting decentralized, blockchain-based solutions.
How do you trade Web3 ETFs?
To trade Web3 ETFs, you can open an account with a brokerage such as Interactive Brokers, look for the ETF by its ticker symbol, and place a trade to add the ETF to your portfolio.
Are Web3 ETFs risky?
All investments are risky. Web3 is known for crypto market volatility, regulatory uncertainties, and the overall nascent nature of Web3 technologies.
Do Web3 ETFs pay dividends?
Some ETFs distribute dividends if the underlying assets generate income. Others may reinvest all returns.
Is it better to invest directly in individual Web3 stocks or a Web3 ETF?
The best course of action will depend on your investment strategy, risk tolerance, and trading preferences. Investing directly in individual assets may give you more targeted exposure and the freedom to micromanage your portfolio. On the other hand, a Web3 ETF could help you diversify and gain exposure to more companies at once, although it won’t give you a lot of freedom over each individual asset.
