Spot Crypto ETFs Outperform Trusts and Strategy Funds

Spot crypto ETFs outperform trusts and strategy funds in terms of performance, according to new research by finance professor Derek Horstmeyer. Spot ETFs provide the closest performance to the underlying assets, offering investors a way to gain exposure to bitcoin or ether without directly holding coins. This is in contrast to crypto trusts and futures-based strategy ETFs, which have been shown to lag behind spot ETFs in terms of performance.

Spot crypto ETFs have emerged as the top-performing investment vehicles for gaining exposure to digital assets like Bitcoin and Ether, according to recent research by finance professor Derek Horstmeyer. The study, published in The Wall Street Journal, highlights that spot ETFs provide the closest performance to the underlying assets compared to other investment options such as crypto trusts and futures-based strategy ETFs.

Since their approval in 2024, Bitcoin spot ETFs have delivered an average monthly return of 6.85%, slightly outperforming the 6.77% average return of Bitcoin itself. The tracking error between the ETF and the underlying asset is just 0.88 percentage points, indicating a high degree of alignment. Similarly, Ether spot ETFs, launched later in 2024, have mirrored Ether’s 4.16% monthly gains, with a similar low tracking error.

In contrast, strategy ETFs that rely on futures contracts have underperformed. Bitcoin strategy ETFs averaged 6.28% per month, lagging behind the coin by nearly half a point and displaying the highest tracking errors. Ether strategy ETFs performed even worse, averaging just 3.55% monthly returns, about 0.6 points below Ether itself. Crypto trusts, which directly hold assets, performed reasonably well but still lagged behind spot ETFs in terms of performance.

The findings suggest that for investors seeking crypto exposure without managing wallets or private keys, spot ETFs are the most reliable option. They offer performance nearly identical to owning Bitcoin or Ether outright, making them an attractive choice for those looking to diversify their portfolios with cryptocurrencies.