Grayscale’s ETH ETF is superior Ethereum fund to BlackRock’s ETHA

The Securities and Exchange Commission has given the green light for spot Ethereum ETFs, which will start trading on Tuesday. 

SEC has approved spot Ethereum ETFs

It approved eight new ETH ETFs from companies like Grayscale, VanEck, Bitwise, Franklin Templeton, and BlackRock. It also allowed the conversion of the Grayscale Ethereum Trust (ETHE), which has over $9.9 billion in assets, into a spot ETF. 

Therefore, many ETF investors will likely start researching the best ETF to buy for maximum returns. 

Like in Bitcoin, most investors will likely opt for the iShares Ethereum Trust (ETHA) or the Fidelity Ethereum Fund (FETH). BlackRock and Fidelity lead in Bitcoin ETF with over $22 billion and $12 billion in assets, respectively.

Grayscale’s ETH vs BlackRock’s ETHA

However, looking at the fee schedule, we see that the Grayscale Ethereum Mini Trust (ETH) is a superior Ethereum ETF to BlackRock’s ETHA. 

These funds are similar to a large extent in that they are built to track the price of Ethereum and use the same custodian, Coinbase. 

However, the funds charge a different fee for what is essentially the same product. ETH will start with a free starting fee for six months and then increase to 0.15% after the waiver period.

BlackRock’s ETHA will start with a waiver fee of 0.12% and a post-waiver fee of 0.25%. Invesco’s QETH will not have a fee waiver period, while Fidelity’s FETH’s fee will increase to 0.25% in January.

A 0.25% expense ratio is relatively small, and most people will not feel it since a $100,000 investment will be charged $250 a year. A similar amount in Grayscale’s ETH will cost only $150. All factors constant, ETHA’s fees will be $2,500 in a decade while ETH’s will be $1,500.

Morningstar addressed the fee spread recently when it compared the SPDR S&P 500 ETF (SPY) and the Vanguard S&P 500 (VOO) ETFs. The two funds track the same index, but SPY has an expense ratio of 0.09%, while VOO charges 0.03%. The analyst wrote:

“VOO earns a top rating of Gold, while SPY earns the next best rating of Silver. The differences may be minimal, but there’s no reason to leave change on the table. VOO charges 0.03%, while SPY charges 0.09%. With all else equal, the fund with the lower fee is more aligned with investors’ best interests.”

As crypto.news has previously covered, a better deal for retail investors would be to consider the opportunity cost of buying an ETF or Ether itself. When buying Ether, once a transaction cost is paid, users can then earn staking rewards, which are currently at 3.50%. In this case, investing $100,000 in Ether yields $3,500 in a year and $35,000 in a decade.