New open-end bitcoin tracker certificate
Vontobel is expanding its bitcoin product range to Sweden. The first open-end exchange-traded bitcoin tracker certificate will be available to trade on the stock exchange from 16. January 2018, providing an interesting option for all those who believe in the cryptocurrency but don’t want to have to deal with IT administration and digital security.
More than one year ago, Vontobel became the first Swiss issuer to launch an exchange-traded tracker certificate on the cryptocurrency bitcoin, and it has since proven to be a resounding success. However, a lot has happened in the meantime: bitcoin exchanges were closed in China, initial coin offerings (ICOs) have hit the headlines and again, there have been various splits or ‘hard forks’, and so on. Despite this long list of developments, interest in the cryptocurrency appears to be unwavering.
Successful symbiosis now also available as an open-end product
The bitcoin certificate is a perfect example of how structured products can open up access to markets and also ‘exotic’ underlyings, and therefore make them investable. The successful symbiosis of a tracker certificate and bitcoin has given interested investors a ‘bankable’ investment instrument for this digital cryptocurrency, and thanks to the unlimited lifetime of the product they can essentially set their investment horizon themselves.
But why is Vontobel now launching a certificate in Sweden? The interest in bitcoin has risen steadily, as well as the need to participate in its price performance. After Vontobel launched the first exchange-traded tracker certificate on bitcoin in Switzerland in July 2016 fixed at USD 664.05 per bitcoin, the price shot up – albeit with some sharp pullbacks – and now quotes at USD 13.650. However, past performance is not a reliable indicator of future price developments, and it must still be taken into account that an investment in bitcoin can entail considerable downside risks.
Structured in the form of a security, the certificate can be traded simply and transparently on the Nordic Growth Market (NGM) like any traditional security.
The certificate as an investment vehicle
‘Wallet’, ‘cold storage’, ‘private key’ – like many people, you might not know what these terms mean in the context of bitcoin. But you may nonetheless expect this ground-breaking cryptocurrency to enjoy long-term success. The exchange-traded tracker certificate on bitcoin allows you to participate in the bitcoin price in USD without any need to have access to a bitcoin platform with your own bitcoin wallet. As an investor in the certificate, you therefore do not bear the risk of a loss of bitcoins as a result of hacker attacks, technical problems, improper handling, or the failure of a bitcoin custodian. As the issuer of the investment product, Vontobel is also responsible for handling any IT administration necessary in the event of a hard fork.
Open-end bitcoin tracker certificate with 100:1 ratio
The open-end tracker certificate will be listed on the Nordic Growth Market (NGM). The newly issued bitcoin tracker certificate will have a ratio of 0.01 (i.e. 100:1) and a management fee of 1.50% p.a. This will simplify tradability and lower the investment hurdle for investors.
The first trading day of the new open-end certificate on the exchange will be 16 January 2018. From this date, investors will be able to trade the certificates on the secondary market via their online broker or bank (e.g. in online banking), buying and selling at current bid/ask prices.
Legal notice
This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.
The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.