Buena Vista Capital announced today (16) the launch of ETHY11, an ETF (exchange traded fund) that provides exposure to Ethereum (ETH), the second largest crypto asset by market value. Like other similar products from the house, ETHY11 provides for a monthly distribution of dividends to its shareholders.
According to the manager, the structure follows the logic already adopted in other ETFs listed in the Brazilian market, such as SPYI11, QQQI11 and COIN11, which use similar strategies to transform asset volatility into periodic payments to investors.
To this end, the strategy relies on the variation in the price of Ethereum through the ETF that serves as the basis of the index (the American DEX VettaFi NEOS Ethereum High Income) and, at the same time, uses part of the volatility of the asset to generate a monthly flow of income, through the call and put options market.
The options market is the segment in which contracts are traded that give the investor the right to buy or sell an asset at a predefined price at a later date, in exchange for paying a premium.
According to the manager, the “covered option writing” strategy aims to capture the premium associated with Ethereum’s volatility, while maintaining exposure to the asset’s price dynamics.
Renato Nobile, manager and analyst at Buena Vista Capital, explains that “the dividend comes from the Ethereum call option”. “This is what we call a Covered Call, a covered sale, which no longer generates risk, on the contrary, it protects the portfolio. And each time we launch these options, a premium is received.”
According to Nobile, the manager launches options with different maturities and different return targets “to be able to seek a dividend based on the volatility of Ethereum”.
“Our annual target is around 30% profitability, which is very high, because the volatility of Ethereum is very high, higher than that of Bitcoin,” says Nobile. “Thanks to these options strategies, Covered Calls, the premiums we receive are used to pay a monthly dividend into the investor’s account,” he explains.
The proposition is to combine revenue potential with participation in cryptocurrency appreciation cycles. For Nobile, the ETF can function as a diversification instrument in a scenario of evolving global markets. “Ethereum’s price dynamics are different than traditional classes. ETHY11 allows you to add that exposure within a structure that generates monthly income,” he says.
The product has a minimum investment of R$100 and a total administration fee of 0.98% per year, has no come shares and is taxed at 15% at source on the product distributed, in addition to 15%, via DARF, on any capital gains from the sale of shares. Trading takes place daily on B3, with liquidity provided by a market maker, and access can be via banks and brokers.
It should be remembered that any investment with variable income, particularly in cryptoassets, involves higher risks than in the traditional market, with significant monthly or even daily price increases or decreases.
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