Introduction

The Schwab Crypto Thematic ETF (STCE) is an investment fund that follows the Schwab Crypto Thematic Index to passively manage crypto assets. This index is linked to companies that engage in activities related to cryptocurrency, blockchain, and digital assets.

Similar to other bitcoin ETFs, the fund keeps an eye on the stocks of companies that are involved in crypto and blockchain-themed ventures. Before a company is included in the index, it goes through a rigorous four-step process. First, the company is evaluated for its relevance to the themes by examining available data, patents, and regulatory filings. Then it is assigned a specific security. If it doesn't fit the criteria, it is excluded.

The next step involves screening the stocks to further eliminate companies. If a company's trading volume over the past three months is less than $2.5 million, it is removed. A company is also excluded if its free float is less than 10% of outstanding shares or if it doesn’t meet the minimum market cap of $300 million. Additionally, a stock is excluded if it lacks 30 days of trading history over the past 50 trading days.

The remaining companies are assigned Thematic Betas, and the weight of each company is determined by dividing its individual thematic beta by the total of all companies. No position is allowed to exceed 20% of the index. The top three countries represented in the ETF are the U.S. (82%), Canada (8%), and Japan (6%). The fund's top 10 holdings, which include Coinbase Global, PayPal Holdings, and CleanSpark, make up about 60% of STCE.