Spot crypto ETFs outperform trusts and strategy funds

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Investors seeking bitcoin or ether exposure without directly holding coins now have three main choices: crypto trusts, futures-based “strategy” ETFs and spot ETFs. New research shows spot ETFs deliver the closest performance to the underlying assets, finance professor Derek Horstmeyer reported for The Wall Street Journal on Saturday.

Spot ETFs, approved in 2024, buy coins at market prices. Since early 2024, bitcoin spot ETFs have returned an average of 6.85% a month, slightly edging bitcoin’s 6.77% average. Tracking error (the gap between fund and coin performance) has been just 0.88 percentage point, far lower than other products. Ether spot ETFs, launched later in 2024, showed similar results, virtually matching ether’s 4.16% monthly gains.

By contrast, strategy ETFs that rely on futures have consistently lagged. Bitcoin strategy ETFs averaged 6.28% per month, underperforming the coin by nearly half a point and posting the highest tracking errors. Ether strategy ETFs trailed even further, averaging just 3.55% monthly returns, about 0.6 points below ether itself.

Crypto trusts, which directly hold assets, performed reasonably well and closer to spot ETFs, but still not as tightly aligned.

The findings suggest that for investors who want crypto exposure without managing wallets or private keys, spot ETFs are the most reliable option, offering performance nearly identical to owning bitcoin or ether outright, the Journal reported.

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