Crypto ETFs Coming to Model Portfolios

BlackRock-bitcoin

BlackRock’s chief investment officer for ETFs and index investments told Bloomberg Television on Monday that Bitcoin and Ethereum exchange-traded funds will be part of model portfolios in the near future. The development was supported by growing confidence in the products from major brokerages.

Samara Cohen said the interest from brokerages that manage trillions of dollars in assets will act as a catalyst for investors to include these funds in their portfolios.

“I think that’s going to be the story of this year and next year,” Cohen said. “They’re doing their job, and their job is risk analytics, due diligence.

Morgan Stanley, Wells Fargo, UBS and other major asset managers have been cautious about crypto investments. Morgan Stanley and Wells Fargo have both bought stakes in spot bitcoin ETFs this year, according to reports, and the former said it would reassess its policies to allow its financial advisors to recommend bitcoin ETFs to their clients. UBS is an authorized participant in the BlackRock Bitcoin Trust (IBIT), meaning it oversees the creation and redemption of shares.

Cohen said they will “look at their role in the portfolio and particularly their benefits as portfolio diversifiers” of these firms.

“Towards the end of this year and next year, we will see allocations to model portfolios. That will give us a lot more insight into how investors are using them,” he said.

What about BlackRock’s Model Portfolio?

Cohen said BlackRock has yet to include crypto ETFs in its model portfolio. BlackRock’s decision to file for a spot bitcoin ETF based on the price of the world’s largest cryptocurrency by market cap in June 2023 is considered a milestone for the Securities and Exchange Commission to approve them because of the size of its asset management. BlackRock has more than $10 trillion in assets under management.

But Cohen doesn’t expect to add ETFs based on the ongoing price of cryptocurrencies beyond the existing IBIT and BlackRock Ethereum Trust (ETHA). In recent weeks, Giant issuers VanEck and 21Shares have filed for ETFs based on the spot price of Solana, the fourth-largest cryptocurrency by market cap, according to data provider CoinMarketCap.

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