Bitcoin Finds A Place In Small ETFs
Funds With Bitcoin
The Grayscale Bitcoin Investment Trust, with assets of more than $60 million, is another vehicle for investors. GBTC is backed by bitcoin advocate Barry Silbert and his Digital Currency Group.
It is the only publicly traded U.S. security in the over-the-counter market invested in bitcoin. Volume is thin, with a few thousand shares traded daily, according to Thomson Reuters data.
Antonis Polemitis, managing director at Ledra Capital in New York—a family office specializing in education and technology—said that on average, clients have allocated 1-3% of their portfolios to bitcoin.
“A lot of people will take that bet with 1% of their assets,” he said. “A 1% loss does not change anyone’s life in any way. If it goes up 10 times, then you get to feel very smart.”
Some investment managers say having bitcoin in portfolios has helped performance.
ARK Invest, which manages four exchange-traded funds with $240 million in assets, holds GBTC in its $12 million next-generation Internet ETF, the ARK Web x.0 (ARKW | D-26), and the $7 million ARK Innovation ETF (ARKK | D-18).
Chris Burniske, analyst and blockchain products lead at ARK Invest in New York, said since investing in September 2015, GBTC has contributed 67 basis points to ARKW’s return and 62 basis points to the ARK Innovation ETF.
For 2015, the next-generation ETF posted a 15.29% return, while the innovation ETF had 3.76% gains.
For Kingsbridge Wealth Management—a multifamily office in Las Vegas with $150 million in assets—GBTC has become a great diversifier, because so far it has had a low correlation with other asset classes, said David Dunn, the firm’s founder and chief investment officer. The firm has about $1.7 million invested in bitcoin and its underlying technology—the blockchain—Dunn says.
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