On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth discussed the Grayscale Ethereum Mini Trust (ETH) with Chuck Jaffe of “Money Life.” The pair talked about several topics regarding 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. This is the ETF of the Week, where we examine trending, new, newsworthy, unique, and intriguing ETFs with the help of Todd Rosenbluth. He’s head of research at VettaFi. And at VettaFi.com, you’ll find all the tools you need to be a better, savvier, smarter investor in exchange traded funds. Todd Rosenbluth, great to be with you again.

Todd Rosenbluth: It’s great to be with you, Chuck.

Chuck Jaffe: Your ETF of the Week is …

Todd Rosenbluth: The Grayscale Ethereum Mini Trust, ticker ETH.

Chuck Jaffe: ETH. It’s the Grayscale Ethereum Mini Trust. Now Todd, this is an unusual pick for you in a lot of different ways, because this is a brand-new, just-out-of-the-box kind of thing. And while ETFs don’t have an IPO the way that stocks do, research and getting stuff when they’re brand new is kind of hard. So, why this ETF now?

Todd Rosenbluth: So you teased “new, newsworthy, intriguing.” This definitely fits all of those categories. So ETH, as we’re recording this on Tuesday, has just begun trading. Now it’s a spin-off, actually, of Grayscale’s Ethereum Trust, which was not an ETF until today. And $1 billion is now in this ETF on day-one trading. It’s actually trading out of the gate quite well, for a relatively new ETF.

We can talk more about what ethereum is and how it offers exposure. But this is a very low-cost way of getting exposure to this emerging investment style. The fee is actually zero for the first six months, until the fund hits a certain asset threshold or a time period. So, for folks that have been waiting to get the benefits of an ETF, but getting access to ethereum and the strong performance that ethereum has had in 2024, and going back even further than that, ETH is a great way of doing that.

Chuck Jaffe: Let’s talk a little bit about ethereum. Because when it comes to crypto, everybody’s familiar with bitcoin. I think people know that there’s ethereum, and maybe Dogecoin, and a couple of others, but they don’t quite understand the differences or why you would want to be specific to ethereum, rather than just being in crypto.

Todd Rosenbluth: Right. So, bitcoin is the largest of the cryptocurrencies. Ethereum, or ether actually, is the second largest. But they’re somewhat different from one another. Whereas bitcoin itself is considered digital gold. And it’s a store of value. Opportunity and limited supply helps the price go up. Ethereum is more tied to blockchain and digital finance, and having transactions go back and forth between financial institutions.

Visa is one of those that’s been using the ethereum network. This is a way of tapping into the technology that is the future. So I like to think of this more as a way of playing the technology theme. But instead of through individual stocks, it’s just actually playing the technology. And as more and more companies adopt ethereum, the price could go up.

But there’s obviously speculation. This is a risky investment, regardless of whether or not it’s a new ETF. This is still a highly volatile investment approach.

Chuck Jaffe: There’s no question that crypto is volatile. But when we’re talking about a single crypto fund, how does that relate to, say, a single-stock ETF? Because we’ve had this evolution of single-stock ETFs, which is basically ways to turbo-charge your exposure to an Nvidia or something along those lines. Are single-crypto ETFs similar or different to single-stock ETFs?

Todd Rosenbluth: I would think of it more as a equity sector strategy. So, as opposed to an individual stock, I would think of bitcoin and ethereum and Solana and some of these other ones as sectors within the overall asset category of cryptocurrency. So the same way that some folks say that you might have gone into bitcoin because it’s the largest technology, the largest of the sectors.

This is more like financial services or healthcare, a more moderately sized segment of the cryptocurrency asset class. Now, I know you’re going to get to how could this fit into a portfolio. And bear in mind, it’s on day one as we’re talking. But we find that asset managers, investment managers, advisors are looking to have a single-digit percentage of their assets tied to cryptocurrency. And ethereum could be a smaller slice and could pair well with bitcoin for folks that want to diversify away from traditional equities and fixed income. And again, that low price point of zero out of the gate and then going up to 15 basis points of ETH is particularly compelling to me.

Chuck Jaffe: In that small slice of a portfolio. As we noted, bitcoin is the largest cryptocurrency. Ether is No. 2. Should somebody be thinking, if I’m going to take a sliver of my portfolio — 3%, 5%, 8% — I’m then going to divide that sliver? Basically, if you know bitcoin is No. 1 and ether is No. 2, it’s 60% to bitcoin, 40% to ether. You know something along those lines? Would you consider an allocation based on where the individual crypto is within the market?

Todd Rosenbluth: That’s one way of doing it. And that’s the way I think some folks that are early adopters into cryptocurrency might be thinking of it. They might have wanted to do that outside of the ETF structure. And the liquidity and efficiency of using an ETF makes it easier to be able to do. But there’s likely to be some advisors and investors that have not gone into bitcoin because they don’t see the use case other than it’s it’s a digital currency. But they’re familiar with some of these large institutions that are using ethereum and using blockchain. This is a way of tapping into that.

So I think there’s a potential audience for folks that are looking at this, in combination with other alternative investments. Or for some folks, this might be the right one. And for others, I realize this is my focus, the ETF of the Week. This might not be the right focus fund for you.

We do this on a weekly basis. This is a new and timely and newsworthy ETF, and I wanted to make sure we were getting in front of it and talking about it. And Grayscale, having had a long history of offering both bitcoin and ethereum products — not in the ETF structure until 2024 — but products that were available. They are a leading voice within this space.

They’ve got that expertise to help you get up to speed about what’s going on in the cryptocurrency market and ethereum in particular.

Chuck Jaffe: I’ve got to ask, because somebody who listens to ETF of the Week will ask for sure. Why is it mini? Why is it the Grayscale Ethereum Mini Trust?

Todd Rosenbluth: So, two products from Grayscale are now trading as we’re talking on Tuesday. They had a preexisting product that converted from a trust into an ETF. That fund, that ETF that is under the ticker ETHE. It has an E at the end of it. An E in the beginning and an E at the end of it. That has a higher fee.

It has over $9 billion in assets. What Grayscale has done is offer a strategy, a product in an ETF wrapper for those that want the larger fund that has the liquidity, the trading history of a preexisting strategy. And they’ve now offered a more retail-oriented, lower-price-point product in the ticker ETH. ETH is zero fee right now, and will go to 15 basis points.

The other Grayscale product is considerably more expensive. And this one that we’re talking about — ETH — actually has a lower share price. I believe it’s around $3. So you could buy one share if you wanted to and just dipping your toe to just get the experience of it. Or you could do 100 shares if you wanted to.

Again, not investment advice, for a very low entry fee, to be able to get some exposure. So it’s a good question. Grayscale has two products. The cheaper one is ETH.

Chuck Jaffe: And there is a lesson in there for our audience, which is if you’re seeing anything and they drop the word “mini,” that from the ETF standpoint, you don’t have share classes like you do with traditional funds. But that “mini” is basically telling you it’s a variation of another fund. And you should always take a look and make sure you’re getting the best version for you.

Todd Rosenbluth: Agreed. So “mini” in ETF terms tends to mean “cheaper.” it’s a way of having your cake and eating it too, in the ETF space. But Grayscale, again, they’ve got the liquidity behind the other product. It will obviously trade more. But for folks that want to dip their toe into the cryptocurrency market using ethereum, ETH is a great low-cost way of doing so.

Chuck Jaffe: And just as we saw a ton of bitcoin funds when the bitcoin funds were first launched, and you made one of them the ETF for the Week, well, ethereum funds are newer. Are we expecting that not so much that this is the first, but that we will see the big run here on ethereum funds now, from everybody else?

Todd Rosenbluth: So as we’re talking today, nine products from eight different firms are trading. So, we’ve got some of the usual suspects that offered a bitcoin ETF: BlackRock and Fidelity. VanEck is among them, and Bitwise. I could name them all, and probably be here for longer. So there are lots of choices. There are lots of low-cost choices.

I’ve chosen the Grayscale product because it’s coming to market with $1 billion and it’s cheap. People are quite familiar with the Grayscale name. It’s one of the funds to consider.

Chuck Jaffe: What we can say about all those other funds, they are not the ETF of the Week, because the ETF of the Week is ETH. The brand-new Grayscale Ethereum Mini ETF. That’s the pick from Todd Rosenbluth at VettaFi. Todd, thanks so much. We’ll talk to you again next week.

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.

Yeah, that’s me. And you can learn all about my hour-long weekday show by going to MoneyLifeShow.com, or by looking for it wherever you find great podcasts. And if you’re looking for great information on exchange traded funds, look no further than VettaFi.com, where they have all the tools you need to be a better investor. They’re on Twitter or X at @Vetta_Fi, and Todd Rosenbluth, their head of research, my guest, he’s on Twitter too, at @ToddRosenbluth. The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by subscribing along. We’ll see you again next week until then, happy investing everybody.