The First Trust SkyBridge Crypto Industry and Digital Economy ETF (NYSEARCA:CRPT) has been on fire, with a scorching 196.1% gain over the past year. However, there are two red flags that investors should be aware of before jumping in.
First, CRPT has massive exposure to just two stocks, Coinbase and Microstrategy, which make up nearly 45% of the fund. These stocks are highly volatile and can see significant drops when the price of Bitcoin is down. Additionally, both stocks have underwhelming Smart Scores, indicating potential downside risk.
Second, CRPT has a high expense ratio of 0.85%, significantly higher than the average for all ETFs. This means investors will pay $85 in fees on a $10,000 investment annually, which can eat into returns over time.
While CRPT has performed well in the current crypto bull market, investors should exercise caution due to its concentration in volatile stocks and high fees. There are other options available for gaining exposure to the crypto space that offer more diversification and lower costs.
Overall, while CRPT may continue to do well if crypto prices rise, investors should be mindful of the risks associated with this ETF and consider alternative options for investing in the crypto industry.