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May 12, 2021Blockchain & Beyond: Uncovering Equity Themes Driven by the Digital Assets Economy & Global Demographics (39:06)
Ed Lopez
Ed Lopez
Head of ETF Product
John Patrick Lee, CFA
John Patrick Lee, CFA
Product Manager
Head of ETF Product Ed Lopez and Product Manager JP Lee discuss the themes driven by the digital assets market and the growth of video gaming and esports.

Matt Bono: Good afternoon, everyone. Thank you all for joining today's media roundtable. My name is Matt Bono. We're pleased to have two of the industry's top leaders for today's discussion. JP Lee, ETF product manager at VanEck, and Ed Lopez, VanEck's managing director, and head of ETF product. Ed is also the host of the Trends with Benefits Podcast, which you could access on VanEck's website at as well as wherever podcasts are available.

Just a few housekeeping items before we begin. Today's call will be recorded. We will look to provide you with a replay as well as a transcript when it's ready after today's session. Should you have any follow-up questions, please feel free to follow up with us afterwards. Also, there will be a Q&A functionality. If you have a question for Ed or JP during the webcast, please raise your hand and enter your question in the box. That said, Ed, I'll turn it on over to you.

Ed Lopez: Thank you all for attending. JP and I've been doing a lot of discussions about two really popular funds of ours that have gotten a lot of attention, both from investors and the media alike. They really touch upon a big demographic shift, that is underway in the marketplace. They touch upon the theme of technology as well. What we're talking about today, is video gaming and Esports. That's one ETF that we one strategy that we launched an ETF on back in 2018 and has really performed well particularly over the work from home environment.

I know one of the questions is going to be what's our outlook going to be for going forward after people go back to work and have to concentrate on work. Then the other we launched recently, which is our digital transformation ETF. We call it your link to the blockchain. It is the fund that's really invested in the digital asset economy. What you will hear here is also a similar story of demographics and technology, but a transformation of the way that we do business of the economy. What you'll hopefully walk away with is an understanding of what we mean by structural growth, that there are multiple pillars underpinning this digital transformation, not only just the cryptocurrency space but the platforms underneath it, the businesses taking advantage of it and building out other businesses with it as well.

One of the things to keep note of as an ETF provider and head of our ETF product group, one of the things that I think is really important to impart to people that we talk to about these funds is that they are fairly nascent industries. One question is how do you get exposure? What's the right way to get exposure to these themes. They're also global, and you'll want to ask us about, and we'll tell you about how we construct the portfolios and work with our index providers to construct the indexes of which they follow.

Some of the rationale behind that, we're big proponents of being pure-play and trying to target the theme in a very pure way, and in a way that helps investors diversify their broader portfolio with names which are really being impacted by the theme at hand. With that, I think JP let's jump into it. We're going to go over a couple of quick decks. We can run through the story pretty quickly, but I think we do best with questions, give and take with the attendees. JP, where are we going start? We're going start with digital transformation?

JP Lee: Yes, let's do that. Digital transformation, ETF, ticker DAPP, DAPP stands for Decentralized Applications. It's a new type of application it's built on the blockchain. It's just a cool ticker that it relates directly to this ecosystem. In the why now is very compelling from our point of view. You're seeing, first of all, the price of Bitcoin and other, digital assets is held up and perform well over the last couple of years, which is generating interest.

When we say generating interest, we mean retail and institutional adoption of this as an investible asset class. Even non-tech companies or non-Bitcoin companies that are investing in Bitcoin, and putting it on a balance sheet, and utilizing it in their corporate strategy. One of the really compelling examples of where we're going is this concept of earning interest on your cryptocurrency. You may have seen an advertisement of earn XYZ in your bitcoins, and essentially what people are doing is you can buy a stable coin, or Bitcoin or whatever, and then loan it out so that it can be used for margin by somebody else and you can earn 7% to 10% interest on your investment. In this interest rate environment, it's just reflective of the opportunities that exist within this ecosystem that are just now coming to light.

You're looking for 7% to 10% interest, the DeFI, the Decentralized Finance Ecosystem is providing a solution for you. NFT's are popping up and are really exciting and cool and these are just a couple of examples. I think right off the bat what is the digital transformation, what are we talking about? It's tied directly to digital assets. Digital asset is something that is issued and distributed on the blockchain. It comes in different forms.

I think the most commonly known one is definitely Bitcoin and Bitcoin is a cryptocurrency. While there's a store value or method of payment, or whatever they're arguing about on the internet today or Twitter, it doesn't really matter because Bitcoin is a cryptocurrency. That's what it is, it's a digital currency. There are also other things like platforms. Ethereum is an example of a platform. When we say platform, we mean, it's a tool. It's a tool to build applications or software to do things.

An example would be a decentralized application. You're taking Ethereum as a platform, building blockchain technology that comes out in the form of decentralized application. The difference between a decentralized application and what's on your phone today is that what's on your phone today is really between what's on your phone, and then that company. Whether that's Google or Amazon, or, or whatever you're doing on your phone, it's really a one-to-one, point to point that there's only two people involved you in the server.

Decentralized applications, if I do something on my app, it's spread them out. It's on my phone now. It's on Ed's phone, it's on the blockchain. It's a different way to do things. There's been a lot of exciting developments, such as the decentralized finance stuff that I was just talking about earning interest on crypto, NFT's are another thing that you can spit out if you have a decentralized application, you want to mint an NFT, you upload an image or whatever, you mint it on the blockchain, on the Ethereum blockchain.

Then now, there's an NFT and then I can buy and sell my NFT's. Ed can trade a basketball card back and forth all day long. Really, this is not meant to be the end all be all, what are digital assets? This is just a framework and a way to think about that it's not just Bitcoin, there are other things going on. Then when you think about what are the different companies doing within the ecosystem, that's when things get really exciting. It's not just one thing, it's not just exchanges, it's not just miners, there are a number of different business lines or, expressions of companies doing business here.

To me, the really cool part about this is so on the right, you'll see the weightings, basically what we do is we categorize different business lines and then we lined up the companies and said, is this company participating in payment gateways, is this company exchange, and on and on. You can see the exposure of the index and the ETF as it relates to these different business lines. What's cool is over time, it's going to change. Right now, holding and trading is big, miners are big, banking is big, go forward a couple of years, banking might become the biggest segment.

Because right now, there's an opportunity zone where the digital asset segment, financial segment is trying to link up to the traditional segments. There's opportunities that, for example, a company Silver Gate Capital is doing, where they're linking the Coinbase ecosystem, to the fidelity and Schwab ecosystem. There's different opportunities and as time goes on, some business lines might do well, some might fall off a little bit, it's going to change.

That's the beauty of this passive investing framework is that we're not making any decisions so the Index Provider isn't making any decisions and say, "Look, we think that miners are the only thing you need to focus on." We don't know. It's going to change over time and that's a really cool feature from my perspective.

Structural growth. What do we mean by structural growth opportunity? Ed got into it a little bit but it means it's not happening in a bubble. There are other things going on in the market or the economy and the business world or whatever it is that is providing support for digital assets. What we see here is the pure-play names in the ETF. Just the historical revenues and market caps aggregated and you can see clearly a lot of growth and a lot of growth, the revenues, and then a corresponding growth and market valuations. Now overlay the chart of Bitcoin.

Overlay a Bitcoin chart from 2012 onto this and go back to 2017, 2018 when the market fell out. It's not like these companies packed up and went home. They kept investing, they kept working and they kept pushing. That is to me one of the most dynamic and exciting parts of this industry is that it's not necessarily, strictly related to the price of Bitcoin. Sure, Bitcoin is more expensive or it has a higher price, these companies have the potential to make more profits, but these companies are working with this and working hard, letting Bitcoin do what it's going to do.

We're still going to be focusing on our business. We're still going to be growing and trying. That is very powerful to me. Then when we think about what are the other things that are supporting this industry that that's not happening in a bubble retail support is huge. This has a lot of different threads you can tease out. You can start at the idea of that there's a generational wealth transfer happening right now. That the silent generation my dad and the baby boomers like my mom they're passing on their wealth to their children and grandchildren. Gen X, Millennials, and Gen Z are inheriting a lot of money on it. Trillions of dollars really.

These younger generations do things differently than the older generations. You see that reflected in investment focus. One of the easiest ones to point out is ESG and impact investing. I've seen surveys and heard talk about how millennials they care that what they're investing in is doing something good for the world. They don't want to invest in something that is a horribly polluting company or as exploiting child labor or whatever it is. The ESG stuff matters for these new waves and investors.

Video gaming and e-sports, another example of an investment story that has grown really driven by and focused on, I would argue Gen X and Millennial more than Gen Z but there's new themes coming out and digital assets are one of these new themes. What this chart is showing is the rise of these mobile Apple trading applications and how many people are downloading them and using them. That's significant in and of itself. Just the fact that young people or younger people, I say 40 and under are downloading Coinbase, are downloading Robinhood and trading for the first time and getting into this stuff and learning about it.

The second important point here is that that ecosystem is very open and conducive to digital assets. You can go onto Robinhood and buy and Robinhood’s the biggest one. You can go on to Robinhood and buy Bitcoin. You can go on to Coinbase and buy Bitcoin. If you think about the retail trading app or the Wall Street Betz crowd or whatever it is, this younger generation of investors that are into Bitcoin, we're dipping we're digital natives. It's not a stretch for us to say, "Hey, I understand what the digital asset is. I believe it can have long-term value and I'm going to buy into it and invest it as a viable alternative for my money, digital assets are here." This is providing retail support for the asset class and the broader ecosystem.

Ed: I really like this chart because it really is stark how many downloads relative to some of the traditional names that Robinhood and Coinbase got in 2021. I know you might ask is this just an outgrowth of COVID and what happened there and work from home? We think that there's still a long runway for this theme. Back 2017, 2018, when Bitcoin washed out a little bit it probably, if it wasn't going to last for a long time, it probably should have just gone away but it didn't go away.

More people started to actually adopt it. There've been companies that have been working on improving it, improving that blockchain, improving other platforms out there like Ethereum and how they can be used to facilitate things like NFTs or smart contracts of other sorts. Then institutions have started to adopt it. Whether it's a big brokerage firm like Morgan Stanley providing access to a bitcoin product or a Bank of New York Mellon finally getting into the custodial business, with regards to crypto.

We're seeing more and more activity in that space. We believe that is part of the underpinnings of the long-term trend. JP, speak to this. This talks about just, from a future side of things, institutional adoption.

JP: One contract on the CME exchange or CME board or wherever is five bitcoins. One contract is a lot. You've seen the contracts listed continued growth and adoption. Again, five contracts per coin, those are institutions using futures as a way to gain access to bitcoin as an exposure, as an asset class. It's not saying, "Okay, look, all these institutions are holding long-dated futures contracts and rolling them over every month, and we're holding bitcoin futures on our books." We're saying it's an investable asset class. It has a place in your book, and futures are one way to access it.

You can see here that institutions are. There's different ways to express this. Another way we could have created this chart is just do a snippet of all the headlines that you see in the news of JP Morgan's doing this, Fidelity's doing that, Morgan Stanley's doing this, Goldman Sachs's doing that. When you list out, and Ed and I had this email where he's listed out all these really great cases of institutions investing in Bitcoin for their own book or providing access to the clients. I think there's a strong case to be made that they're doing that because they don't want to lose those clients.

Go back to the chart before. All these people are downloading apps so they can buy Bitcoin are getting involved and they need it. Somebody said it's like tail wagging the dog. They have to provide access or exposure or get involved or they're running the risk of this runaway growth story, while the old guard financial institution is just sitting on the sidelines. They can't afford to do that. Maybe it's a little bit of FOMO playing out but the case still stands that these people are getting involved. That's what these two slides, back to back, are. Structural growth is happening, revenues, and market cap.

Retail is really involved and then institutions are involved. That's what we mean by structural support. We've gone through what's happening, why people should care. Let's talk about how do you get exposure. DAPP, the Digital Transformation ETF is a passive ETF tracking index. The index construction is super important. The rules are very important because we're not making decisions. It's rules-based index at the index level. The MVIS Global Digital Assets Equity Index, first of all, the index is trying to provide the most pure exposure as possible.

That means companies with over 50% of the revenues, or companies that are really investing a lot in projects that could turn into a lot of revenues, and finally, companies that have a lot of bitcoin and digital assets on their balance sheet, a company like MicroStrategy. From there, we will include non-pure names like semiconductor companies or online payment companies to get to 25 minimum component number. Right now, there are 23 names in there that are pure and three non-pure names. The three non-pure names are Nvidia, PayPal, and Taiwan Semiconductor.

Those names are capped at 4.5%. No prognostication here but we anticipate the index to be 100% pure, sooner than later, hopefully within the next couple of rebalances, which is exciting because it's a young market. If you wanted to make a semiconductor ETF, there's a hundred semiconductor names that meet all these size and liquidity requirements.

It's very easy to construct an index around a specific theme. This is definitely an early mover kind of ecosystem. A lot of these companies are brand new. This index couldn't have been live up to last year because these companies were either too small or didn't exist as a public company.

It's very important to keep in mind. One cool feature of the index is the fast track inclusion. If a company IPOs, it can come into the index as quickly as 5 days and a maximum of 10 days if it's over a billion dollars. A great example is Coinbase, listed on April 14th. That Friday, it was over a billion dollars. That's the rule. If it's over a billion dollars on the Friday after IPO comes in, on the following Friday. Once the IPO, over a billion dollars on the first Friday comes into the index on the following Friday. That was a great case example of that. The final thing I'd say is that there's no Bitcoin in here. There's no BTC, ETC. There's no Canadian ETF. It's not in here and that's for a reason, it's because that's not what the exposure is intended to do. If there was a Bitcoin ETF that got approved in the US tomorrow, it would not come into the index because the index does not hold the underlying digital assets. It's just the companies only. Much like our gold mining ETF only holds gold mining companies. It doesn't hold bullion. It's a distinction's important to note and similar to how somebody would buy a gold miner for those exposure to those gold mining companies, that is what this would be as well.

It's a good corollary. This is a take-home slide. When you think about why ETF, why does this work and it's because it's a one-trade solution to get exposure to all these different business lines, without having to make the decision of look I’m gonna overweight miners. I only want the hardware, it's a one-trade solution. It's providing exposure to the industry. Then something we haven't really talked about is that you'll find these names in your broad market indexes.

I want to say it's right around 1% of the S&P 500 are these names and it's Nvidia and PayPal. The pure play names are not in the indexes yet. That's exciting and it leads the discussion of where does this fit in your portfolio relatively low correlation with the broad market benchmarks, low overlap with the broad market benchmarks and you see it, the price return of some of these names in the last year, we're trying to provide targeted exposure that has the potential to generate alpha in your portfolio. Global growth, high PEs. That's what we're talking about here.

Do you see that reflected in the PE ratio here? Just under 51 PE that's very high. I think the broad market's figuring out whether that's okay. The growth names have definitely been under pressure since the presidential election in November. Value has outperformed growth by a wide stretch and we're seeing continued rotation out of the growth names and the sell-off that we're seeing today. Something to note here, global exposure it's not just United States, not just China, it's a global portfolio and it's not just IT.

What's neat is that we're not trying to say, "Look, it's got to be an IT company to get in." It doesn't matter. There can be communication services companies. It can be financial as companies fast forward a couple of years. Maybe there's a utilities company who knows. That's part of the beauty of, so we're not trying to create these top-down rules to tell the portfolio what it should be. The risks, this is our favorite slide. I feel like I'm out of breath. At risks here, what are the risks underlying volatility of digital assets, early-stage company risks, valuation risks that we're seeing playing out right now?

There's a lot of them. That's a feature, not a bug. This is a high volatility, high-risk investment with the potential to pay off for you in the long run or pay off for the investment in the long run. That's pretty much it for me. For DAPP specifically, I don't know if Ed, if you wanted to have any final thoughts or anything about what you think is important.

Ed: Well, we can move on to video gaming and e-sports real quick while we wait for some questions to come in, but I think a lot of the things that you highlighted carry over as well, just in terms of from a demographic standpoint. In particular, the way that the newer generation wants to do business and wants to entertain themselves. We just talked about the digital asset economy about digital natives and how they're used to interacting within their own finances and their own business and where we're watching this economy be built out to help facilitate a better more efficient activity in the business world. Now on the entertainment side, we've seen cord-cutting happening for many years now. People have become very accustomed to streaming content online.

What we've seen over the last couple of years, in fact, are people increasingly searching out ways of entertaining themselves with interactive online content. One of the leading industries in this space is video gaming. They have the technology they've built out technology to allow people to play games with their friends and peers, to interact with their friends and peers in a virtual world to go listen to music or just hang out really. That's a whole another trend that's underlying this video gaming phenomenon not to mention e-sports as well, but it's really bigger than that. I think what you will find in the video gaming and e-sports space is the potential disruption of traditional media and entertainment. You have video game publishers, which are really at the top of the e-sports leagues right now in terms of just the power that they wield. Potentially being the next blue-chip media companies out there and might they be fodder for the next wave of MNA growth that we don't know, but it's a pretty exciting area. I know it's an area that JP knows very much about. I'll let him chime in on what we're seeing in the space and what to look for going forward.

JP: I'm going to do five minutes on the investment case for video games as a whole, first of all, another structural long-term growth story supported by other things. First of all, $175 billion in revenues in 2020, that's bigger than the cybersecurity industry. That's bigger than the robotics industry. This is a big industry. 2020 was a breakout year for video games. It's like the investing world woke up. When everybody had to stay home and then they said, "Well, where's the growth coming from? What are people doing." Video games was the answer.

We saw a big spike in 2020 for users and engagement. We would see that as an acceleration of trends that were already in place. ESPO was up 85% last year, which is a huge amount. It was up 40% in 2019 when the S&P was up 30%. S&P is up 30, ESPO was up 40. In this case last year, I want to say the S&P was up in the twenties, ESPO was up 85%. Again, high growth names and where's that growth coming from? Why is it growing?

This is what we get to the structural support is that changing consumer demand. People want to be online. They want to be talking to each other. They want to be posting pictures with each other, see that with Facebook, Instagram, Twitter, TikTok. Video games are filling that same void, but they're filling that same need of people wanting to do things online with each other. In a lot of ways, these video games are becoming social media platforms. You don't go on a fortnight necessarily just to win the game and have a good time you're going on there to hang out and spend time with your friends and goof off and talk trash and just have fun.

That's where video games sit. If you think about how do you want to be entertaining? It's not just sitting there and watching the TV, watching King of Queens at the end of the day, you're interacting. It's different than it used to be. The second part is demographics is that there's different people in the world now, today than there were 20 years ago and they want to do different things. I'm 37 years old. I've been playing video games since I was five years old.

Think about your average 20-year-old. They didn't play video games on their iPad since they were born. My three-year-old niece has an iPad. She's going to grow up and play video games that are part of our lives in ways that previous generations weren't. It just makes sense to us. That's one aspect of demographics. The other is that the emerging markets opportunity has a longer runway. There's not everybody in the emerging markets world has a smartphone yet and what do you do when you get your first smartphone is you play it, you download Angry Birds and you figure out how to move your finger on, make things move up.

EM consumers are providing long-term support. Consumers, in general, are more open to digital ideas and playing games online and then people generally speaking, just want to be doing things online and interacting with each other. Mobile is the big story. Mobile is growing faster and as bigger than PC and console. That's a huge deal for a number of reasons, but essentially mobile is new, mobile wasn't around in 2005. Mobile started when iPhone came out. In that 14, 13 years, mobile has just taken over.

It's created this huge, again, opportunity zone where everybody wants to get a piece of that pie. It's like the gold rush in the wild west. You have companies that you see this mobile growth and they say, "I need to get in there. I need to somehow get involved in that." They do it a number of ways you can launch your own mobile game, or you can buy somebody that's already doing it. The mobile story is also generating a lot of action within the video game ecosystem, through M&A, through competition, through all this stuff and it's an exciting story. There's another thing that's happening right now. This in-game spending is huge and it's different than how it used to be.

In that you don't have to go down to the store and buy a game for 50 or 60 bucks. Games are free now. A lot of the best games in the world right now are free. League of Legends, Fortnite, COD, any War Zone, any mobile game it's free and that's different than it used to be. It's not a one size fits all thing. I think the thing here to keep in mind and emphasize that these companies are trying to get as many people in the door as possible. Call of Duty War Zone was such a huge success because everybody got in the game for the first time. I'd never played COD I've been playing games my whole life, but I'm all of a sudden playing Call of Duty all the time. Then what happens with some playing that's free to download. I play, I like it. I plan with my friends. I'm now spending money. Now spending 20 bucks here. I want to buy the premium game that costs 60 bucks so I can level up my guns faster.

Sure. I'll do that. It entices people to spend money because you're in the door for free. Fortnite made $2.4 billion in 2018, the most in any video game that ever made in a single year at that time from a free game. That's a very important aspect. I think one thing to take away too, it's not one size fits all. People are doing it differently. Activision, you get the free game Call of Duty War Zone and then they're trying to upsell you to Modern Warfare. Take two does the opposite.

You still have to buy current the photo five or NBA 2K and then you can start buying stuff online. It's not one size fits all, but the name of the game is getting people in the door and turning them into paying customers. We wrote these in the earlier year. They pretty much hold up pretty well. Mobile gaming is still huge. The secondary services like Twitch and Discord are very popular and they're expanding beyond just gaming. It's a place where people come together and talk about games or whatever life it's like social media in real-time, it's a platform.

M&A activity is definitely still rolling right along. M&A activity is being driven by people trying to get into mobile or companies positioning themselves for the Cloud platform, warm wards, which are on the way. What that means for mobile is do you want to launch a new game, spend $50 million or whatever it is and then market it and try to organically grow a user base, or do you just buy somebody who's already doing it successfully?

Companies are buying right. EA bought Glu mobile. Zynga is buying a new company every week. Tencent is very aggressive in the M&A space and on and on. Then the other thing that's happening is companies like Microsoft, Amazon, Facebook, Google, the conglomerates, they're trying to get ready for the Cloud Wars where you don't have to even buy an Xbox anymore. You just log onto the internet, log into your Microsoft game pass and you're playing a game. The name of the game there is exclusive. These companies want to have the best exclusives they can. Microsoft buys a company called ZeniMax, which owns fallout, Skyrim, June quake, all these awesome games.

Now Microsoft can launch those games as exclusives when the next one comes out. Then cloud gaming is coming, but we're not there yet. That's the bottom line for me. There's plenty of risks in the video game market too, what we're seeing right now put as valuation risk along with the other growth names. PE stocks are having some trouble, ESPO is definitely underperforming the S&P so far this year. That I think is understandable and relatable. I think that the one really to talk about here is return to normalcy risk is everybody's asking you well, what happens when I can go to the Giants game instead of playing a video game all day.

I would say that there's going to be some pullback correction, but I think the long-term trends are still in place, especially when you factor in the emerging markets, consumers and how much growth they're seeing in the mobile side there. That's pretty much it. East Beau is providing it. Same thing as DAPP is pure play exposure, over 50% of the revenues to get in. Then from there, it's just trying to cover the top 90% of the market and quarterly rebalance 8% cap positions. Resulting portfolio is tilted towards large caps and where does it fit in the portfolio growth sleeve have potential that kind of thing. I think that's it for me for the breathless ranting unless Ed you want to wrap it up.

Ed: That's good. We do have a question JP, but that, that was good. Both ESPO and DAPP, the opportunities are global. The strategies are built to express a global exposure which I think is very important just from a diversification standpoint. Like JP talked about on the video game side, different companies are doing different things. They're addressing different markets, but there's still this underlying trend of a young demographic and in particular, an EM growing EM growth and adoption along with the mobile space as well. We're seeing a lot of that play out. You want to have exposure globally as well. Here's the one to question that we have, basically about how we're looking to distribute, sell, or market, ESPO or DAPP.

Now, what channels tend to present the most opportunities for VanEck. Are there any type of investors on the retail or institutional side that tend to gravitate towards these strategies? I'll start out with my first answer would be, it really depends on the different strategies generally. Obviously, an ETF can be purchased by pretty much anyone and we want it to be purchased by anyone. What it depends on also is the maturity of the ETF and how young it is when it's brand new, it's probably not approved on wirehouses yet. We'll market to individual investors and independent broker-dealers. We'll start to try to dip our toe into institutions, but typically institutions want to, let's say at least $100 million in assets before they really start to consider it. What we found like with ESPO, for instance, there were some institutions that were early adopters that had a model portfolio of thematic strategies that included video gaming and robotics or something else cybersecurity.

They were open to it because you need somebody there that is forward-thinking and understands what that potential opportunity is in the space. We've had a few of those, on the institutional side, early on. Then as the ETFs grow they become more available to a broader swath of people and financial professionals. You could see that strategy, you could see those strategies to grow even more than, but our typical approach is, I can't really say we have a typical approach. Like I laid it out. It's making sure that we develop enough awareness around it. We understand and trying to understand who might be able to buy it and who might want to buy it.

Now on the DAPP side JP, I think we've heard that there are advisors that are interested in that strategy. Partly because it's an easier way to help their clients get exposure to the cryptocurrency world in something that is a registered product to date. They're open to that actually like the idea that it's equities, as opposed to the underlying currencies. On the flip side, we've heard that some advisors are just waiting for the Bitcoin ETF whenever that comes out but so it depends. Hopefully, that gives you a little insight.

JP: I'll just add is I want retail involved. I want institutions involved. I want everybody involved and these products are, these indexes are designed to allow institutional level trading. There's all these minimum size and liquidity so that we can facilitate a big order without blowing out the spread. I think I do believe that there are retail, institutional, FA there it's a compelling investment case. I think that's why ESPO particularly has been a successful strategy, is that people understand it. Whether you're a 35-year-old who plays video games and is buying ESPO for the first time on Robinhood, or you're an advisor who sees why this high growth thematic makes sense. Then one extra point is last year was a huge year for thematic strategies, thematic ETFs, and they punched above weight. If you say, what's the market cap, weight of thematic strategies compared to other ETFs, they got more inflows than they should have. I think it's because there's been widespread adoption and acceptance of thematics as a viable investment strategy. Good question.

Ed: There you go. If there's any more questions please chime in, otherwise, I'm happy with what we've gone over so far.

JP: We really appreciate your time and listening to us feel free again to reach out if there are any other questions. These are pretty exciting strategies for us. We'd like to talk about them as much as possible.

Matt: Thank you, Ed. Thank you, JP. As a reminder, this video will be made available shortly and accompanied by a transcript. As Ed said, if you do have any follow-up questions or if you had a question that wasn't addressed today, please don't hesitate to let us know. Have a great day, everybody. Thank you.

[00:39:06] [END OF AUDIO]

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This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities or financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

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, investing in the video gaming and esports companies, software, internet software & services and semiconductor industries, equity securities, communication services and information technology sectors, small- and medium-capitalization companies, issuer-specific changes, special risk considerations of investing in Asian, Chinese and Japanese issuers, emerging markets issuers, foreign securities, foreign currency, depositary receipts, market, operational, cash transactions, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, all of which may adversely affect the Fund. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Small- and medium-capitalization companies may be subject to elevated risks.

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 Please read the prospectus and summary prospectus carefully before investing.