On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth discussed the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF overall.

Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week, where we examine trending, new, newsworthy, unique, and intriguing exchange traded funds with Todd Rosenbluth. He’s the head of research at VettaFi. And that means he’s behind a lot of their tools which you can find at VettaFi.com, if you’re looking to make yourself a better, smarter, savvier investor in exchange traded funds. Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: Great to be back, Chuck!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The CoinShares Valkyrie Bitcoin Mining ETF (WGMI).

Chuck Jaffe: WGMI, CoinShares Bitcoin Miners. This rolls off my tongue, because it rolled off my tongue at the beginning of March! We very seldom revisit funds, but we’ve never, in the history of ETF of the Week, revisited a fund this quickly. So, why are we back on this fund now?

Todd Rosenbluth: So, 78% is my number for you; 78% is how much WGMI went up in the second quarter. We at VettaFi wrote an article about it a week ago. Our team did, and it caught my eye. I thought, “I remember that fund! We talked about it in March.” I remember you sharing constructive feedback on how it was on its way down and was way too early, and relative strength — I guess we call that relative weakness.

Up 78%. I figured, let’s come back to it. This is a great ETF for people who want to do a risk-on, equity approach to getting exposure to cryptocurrency. We’ve talked about individual cryptocurrency ETFs, spot bitcoin, spot ethereum, I think we might have talked about as well in our conversations.

This is an equity exposure. So it’s going to fit more easily into a portfolio for many folks. And it’s worked. And so, yes, this is the rare time I’m coming back. Maybe you have applause and you can put in there. That basically shows this one worked. So when it works, I’m going to come back and take a quick bow.

Chuck Jaffe: And you could do that more often if you wanted to. Plenty of your picks do well, but there’s a lot to still unpack. Because when we first discussed this, one of the big things was that first we got spot bitcoin ETFs. And you and I talked about them. And then it expanded to some of the other crypto.

But this is a miners ETF. That’s why it’s an equity ETF. And just as there is a difference between “do you own gold, or do you own gold miners?,” and “how do miners versus the metal itself perform?,” well that’s what seems to be showing up here with crypto, that there is a difference, which we didn’t know for sure that there would be, between owning the asset itself or owning the miners. And in this case, I’ll point out.

But, if you looked at the Bitwise Bitcoin ETF, you weren’t hurting during that second quarter. It was up 35%-40%, something along those lines. But again, miners did much better. So does this advocate for if you’re going to be a crypto investor, owning both sides? Own the crypto, but also own the miners?

Todd Rosenbluth: So, you certainly can fit both of these into a portfolio. Both being an ETF like WGMI, or CoinShares has its own spot bitcoin ETF. The ticker is BRRR. But if we just wanted to use two of the CoinShares products side by side, we did see stronger performance, much stronger performance, in the last three months for WGMI.

But year-to-date, it’s actually underperforming. So it fell further, and it rose further, or rose higher. So that’s a good thing for people who are comfortable with that risk-on approach. It’s certainly differentiated between having exposure to spot bitcoin. You can fit both of these ETFs within a portfolio, but yet you are exposed to the direction of bitcoin, and bitcoin going up in value.

And you’d have to be a believer that bitcoin was at it could be additive to your broader portfolio, much like you said with gold and gold mining. So, you’d have to believe that there was going to be greater demand for gold for you to own gold directly and own the supplier of that gold. It’s just this is a different, a newer-age version with bitcoin exposure through the CoinShares ETF that we’re primarily focusing on, and then of course the spot bitcoin ETF that they’re not alone in offering.

Chuck Jaffe: What we saw with the advent of bitcoin funds was this huge rush into them, from the industry standpoint, lots of funds created. And then from the investor standpoint, demand had been pent-up. Give me my chance to get in there. We have seen less activity, in terms of people creating mining funds. And some of the activity seems to have slowed at least a little bit in the space.

Are we getting to where the bitcoin space very quickly has kind of gotten fully developed? And what we’re really seeing next is going to be more of the ethernet and other odd cryptos and other things that are beyond the mainstream ones? Or is there still a lot of room left to go, which would, by the way, also be another reason to own the miners?

Todd Rosenbluth: I think there’s a supply of ETFs part of that conversation and the demand for bitcoin, and thus what will ultimately drive the returns. So, we’re not seeing a slowdown in the number of crypto-related ETFs that have come on market. And we now, as an industry, are moving on to Solana as another third leg of that, with bitcoin and ethereum. There are perhaps other ways to get exposure to cryptocurrency that might find its way into the ETF wrapper.

But we still are really in the early days for crypto ETF adoption and for bitcoin within a broader portfolio or adoption. It’s still for many advisors not part of the portfolio for their end investors. Or if it is, it’s a low-single-digit percentage, as many people are either getting more comfortable in what the rewards can add to the portfolio, the risk that you take on.

So I still think there’s room for adoption. What appeals to me about this CoinShares equity ETF is the equity part of it. Because for many people, it’s still not possible, or it’s harder, for them to get their arms around to add an alternative like bitcoin. But you could add WGMI, and I’m sure some people have done so, given that the ETF has started to grow in size, as part of your risk-on equity exposure.

But what you get is quite different. We’ve talked about the Nasdaq 100, the triple Q’s beforehand, or even the core S&P 500 strategies. You’re going to find differentiated stocks in here. There’s little overlap, if at all, to what you’d have in your core large-cap equity exposure. So, that’s additive to the portfolio. It means you should think of it within your equity slice of a portfolio, and benefit from the rewards that can happen.

Chuck Jaffe: At that same point, how much do you put on the airbags and try to make sure you’ve got some protection? How much of a portfolio would you let this fund be? Let’s point out, it’s not just that it’s capable of doing 78% a quarter; this fund was up 300% in its first full calendar year.

So, you’ve got something that can run, but I would assume you’d want to both — call your winnings when you get them and be careful. So is there a mental space for you that this should occupy in people’s portfolios?

Todd Rosenbluth: I think of this not as a bitcoin ETF, but as a thematic equity ETF. I think we’ve talked about that. We find that many advisors and investors have roughly 5%-7% of their portfolio tied to thematic equity strategies. That can be bitcoin mining and tied to crypto equities. That can include artificial intelligence equity ETFs, or robotics, healthcare technology. This could fall into that slice of the narrower risk-on equity part of your portfolio.

And yes, this fund had a tremendous run a couple of years ago. There are some time periods obviously when it falls down in value. This is a risk-on, and as a result, when the market shifts or when the market sells off, this is an ETF that will face some volatility on the downside also. So you want to have this fit within a broader diversified portfolio, not be the core of your portfolio.

Chuck Jaffe: Last question here, Todd, because you are taking a bit of a victory lap, and we are talking about this fund after a 78%-plus quarter. You don’t normally make market calls, and I’m not suggesting that it is one. Presumably if you didn’t think this had some more room to run, you wouldn’t be ringing the bell on it again, would you?

Todd Rosenbluth: Right. So I think in the second half, if we are in more of a risk-on environment, and not a lot of that depends upon the macro economy and what’s going on with global relations, the market is going to remain volatile. This is an ETF for people who are willing to lean into that volatility. And there’s room.

Again, I’m pleasantly surprised that you didn’t share with me the charts. But I believe the technical analysis is supportive of this ETF going forward. It’s rare that I’m bringing that to the table instead of you doing so. Usually you pointed out when it’s not necessarily with the relative strength you did last time. I think the charts are favorable for this. Let’s hope they’re right.

Chuck Jaffe: It’s WGMI. The CoinShares Bitcoin Miners ETF. The ETF of the Week again from Todd Rosenbluth. Todd, great stuff. And yeah, good pick. Good to talk about it some more. Thanks for joining me!

Todd Rosenbluth: Thanks a lot, Chuck.

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And I am Chuck Jaffe. And I’d love it if you check out my hourlong weekday show by going to MoneyLifeShow.com, or by searching for it wherever you find your favorite podcasts.

Now, if you’re looking for more information on your favorite ETFs, there’s no better place to look than VettaFi.com, where they’ve got a full suite of tools that’s going to help you make yourself a better investor. They’re on Twitter or X at @Vetta_Fi. Todd Rosenbluth, their head of research, my guest. He’s there too. He is at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app. And we’ll be back with another ETF for you to consider next week. Until then, happy investing, everybody!

For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.