VanEck, a prominent asset manager, has decided to close its futures-based Ethereum exchange-traded fund (ETF) due to insufficient investor interest. The firm announced this decision on 6 September, attributing the closure to several factors, including performance, liquidity, assets under management (AUM), and overall investor interest.
The VanEck Ethereum Strategy ETF (EFUT), which launched in 2023, has struggled to attract significant investment. As of 6 September, the fund had approximately $21 million in AUM. This contrasts sharply with the success of VanEck’s spot Ethereum ETF (ETHV), which has amassed over $55 million in AUM since its launch in June.
The fund will cease trading on 16 September, with assets expected to be liquidated and returned to investors around 23 September.
Nate Geraci, president of The ETF Store, noted that the closure was unsurprising given the dominance of spot cryptocurrency ETFs, which have attracted the majority of inflows in the sector. Geraci had previously predicted that the rise of spot ETFs would render futures-based crypto ETFs obsolete. He suggested that VanEck likely viewed EFUT as more of a marketing tool than a viable long-term product.
Spot ETFs, such as the Grayscale Ethereum Trust (ETHE), have gained significant traction, with spot Ether ETFs collectively managing approximately $6.5 billion in AUM. In comparison, futures-based Ether ETFs have attracted less than $170 million in AUM, according to data from Morningstar.
Top ETF launches in 2024. Source: The ETF Store
Futures-based ETFs generally underperform their spot counterparts due to the costs associated with rolling over contracts each month. Futures contracts are standardized agreements to buy or sell an asset at a future date, and maintaining these positions can incur additional costs.
Cryptocurrency ETFs have been a significant area of growth in 2024, with 13 of the 25 largest ETF launches by inflows being related to cryptocurrencies.
The decision by VanEck to close its Ethereum futures ETF underscores the challenges that futures-based funds face in a market increasingly dominated by spot ETFs. As investor preference continues to shift, futures-based products may struggle to maintain relevance.
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