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Best Ethereum ETFs In 2024: Cryptocurrency Trading Made Easy

Best Ethereum ETFs In 2024: Cryptocurrency Trading Made Easy

It’s never been easier to buy Bitcoin and Ethereum in Canada, especially with the launch of several ETFs for each coin. Investors can easily add the popular cryptocurrencies to their portfolio and hold them alongside their other investments in their brokerage account.

In this article, I cover the top Ethereum ETFs in Canada as a follow-up to my recent post on the best Bitcoin ETFs. I’ll let you know how Ethereum ETFs work, some of the pros and cons of buying Ether inside a fund, and who I think this investment is best suited for.

What Is an ETF?

Traditional Exchange-traded funds, or ETFs, aim to replicate an underlying stock market index’s performance by closely matching its holdings. Due to the passive investment style, the fund keeps the management fees low, a big draw for fee-conscious investors. ETFs should not be mistaken for index mutual funds. While they have similarities, ETFs trade like individual stocks; you can trade them instantly on the open market.

How Do Ethereum ETFs Work?

An Ethereum ETF works much like a regular ETF, but it only holds Ethereum, so it’s not a diversified investment. All Ether ETFs are considered high-risk due to the speculative nature of cryptocurrency and the lack of diversification.

As of April 2021, Ethereum, also known as Ether, can be purchased in ETF form. Ether is the second-largest cryptocurrency after Bitcoin, and there are already four Ether ETFs from which to choose. In the ETF form, you can easily trade your crypto inside an online brokerage account. There’s no need for a digital wallet or a separate account with a crypto exchange, like Coinsmart or Bitbuy.

Best Ethereum ETFs In Canada for 2021

Many of the same players that brought you Bitcoin ETFs early in 2021 also launched their own Ethereum ETFs later in the year. Currently, there are a total of four Ether ETFs available, but I would suspect that more are on the way. Admittedly, there isn’t a whole lot that differentiates these funds at this point. Let’s take a closer look at each one, starting with CI Galaxy’s ETHX.

1. CI Galaxy Ethereum ETF (ETHX)

ETHX was the first Ether ETF out of the gate in April 2021, and it tops our list due to its low MER of .40%. The MER is capped at .95%, which is lower than the competition. Galaxy Digital Capital Management manages the ETF in partnership with CI Investments. At the time of this writing, total assets under management (AUM) are over $900MM.

ETHX At-A-Glance

Name: CI Galaxy Ethereum ETF (ETHX)

Inception Date: April 16, 2021

Ticker: ETHX

Exchange: TSX

Management Fee: .40%

Assets Under Management (AUM): $910MM

Storage: 100% cold storage

RRSP/TFSA Eligible: Yes

Listing Currencies: Available in CAD (ETHX.B) & USD (ETHX.U)

2. Purpose Ether ETF (ETHH)

Three days after the launch of ETHX, Purpose Investments launched its Ether ETF. It’s listed on the TSX under the ticker ETHH and is also available in USD currency as (ETHH.U.)

At 1.00% with a cap of 1.50%, the MER is relatively high. You should take this into account with large portfolios, as fees can take a big bite out of returns over time. You can hold ETHH in both registered and non-registered accounts. Currently, the AUM is $324MM.

ETHH At-A-Glance

Name: Purpose Ether ETF (ETHH)

Inception Date: April 19, 2021

Ticker: ETHH

Exchange: TSX

Management Fee: 1.00%

Assets Under Management (AUM): $324MM

Storage: 100% cold storage

RRSP/TFSA Eligible: Yes

Listing Currencies: Available in CAD (ETHH) & USD (ETHH.U)

3. Evolve Ether ETF (ETHR)

Evolve ETFs launched their Ether exchange-traded fund in April 2021. It’s similar to the other funds listed here in that it’s RRSP eligible, offers secure, 100% cold storage, and is listed in both Canadian and US dollars. The MER sits in between ETHX and ETHH at .75%. Evolve’s website doesn’t make mention of an MER cap. The AUM is on the low side, at $86MM.

ETHR At-A-Glance

Name: Evolve Ether ETF (ETHR)

Inception Date: April 19, 2021

Ticker: ETHR

Exchange: TSX

Management Fee: .75%

Assets Under Management (AUM): $86MM

Storage: 100% cold storage

RRSP/TFSA Eligible: Yes

4. 3iQ CoinShares Ether ETF (ETHQ)

The CoinShares Ether ETF is an open-ended ETF with a management fee of 1.00%. It can be held inside any of the following account types: non-registered, RRSP, RRIF, RDSP, DPSP, RESP, TFSA. The fund’s net asset value (NAV) is slightly over $375MM.

ETHQ At-A-Glance

Name: 3iQ CoinShares Ether ETF (ETHQ)

Inception Date: April 19, 2021

Ticker: ETHQ

Exchange: TSX

Management Fee: 1.00% (capped at 1.25%)

Assets Under Management (AUM): $375MM

Storage: 100% cold storage

RRSP/TFSA Eligible: Yes

Ethereum ETF Pros and Cons

For the average crypto investor, there’s a lot to like about the four Ethereum ETFs currently available. The biggest advantage is the ease at which you can buy and hold an ETF. All you need is a regular online brokerage account. That means you can keep your crypto in the same place you hold your other investments.

On the downside, you don’t get the same flexibility as you do when you buy crypto through more traditional means. Also, while the MERs are much lower than what you would pay for a traditional equity mutual fund, it does add to the cost of owning Ethereum. For more pros and cons, see the list below:

Ethereum ETF Pros

  • Simple trading in a discount brokerage account
  • Investors own real Ethereum
  • Safe from hackers – stored offline in cold storage
  • RRSP and TFSA eligible

Ethereum ETF Cons

  • High risk, speculative investment
  • MERs add to the cost of owning Ethereum
  • No decentralization, favoured by many crypto traders
  • Can’t be exchanged for other cryptocurrencies (CAD or USD only)

Where to Buy Ethereum ETFs

The best way to buy Ether ETFs is through a regular discount brokerage. This is the same type of account you would use to buy stocks, bonds, or any other ETF. If you don’t already have a brokerage account, there are 3 that I recommend for ETF purchases: Questrade, Wealthsimple Trade, and Virtual Brokers.

All three offer commission-free ETF purchases, which can result in substantial savings in fees, especially if you make regular ETF purchases. Questrade is great for most investors while Virtual Brokers has a lot to offer sophisticated and active traders. Wealthsimple Trade makes ETF trading easy with a mobile-only trading platform that is perfect for beginners.

Should I Buy an Ethereum ETF?

Still wondering if an ETF is the best way to buy Ethereum, or if Ether ETFs are appropriate for your portfolio? The ETF certainly won’t appeal to all crypto investors. It can only be transferred to and from fiat currency (CAD or USD), and can’t be exchanged for other types of crypto. You also can’t store it in a digital wallet. But if your goal is to get some exposure to Ethereum cryptocurrency in the easiest way possible, this is the way to do it.

Remember, however, that any type of crypto trading is highly speculative. Cryptocurrency prices can fluctuate widely over short time periods and they should never comprise a large percentage of your overall portfolio. In other words, only buy as much crypto as you can afford to lose. And always speak with an investment professional before making your final decision.

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