BlackRock’s Chief Investment Officer of ETFs and Index Investments, Samara Cohen, announced on Bloomberg Television Monday that Bitcoin and Ethereum exchange-traded funds (ETFs) are expected to be integrated into model portfolios soon. This forecast reflects the increasing acceptance of these products by major broker dealers.
Cohen highlighted that the expanding interest from broker dealers, who collectively manage trillions of dollars in assets, is poised to drive investor inclusion of these funds. “This will be a significant trend for this year and next,” Cohen stated. “These firms are performing their roles in risk analytics and due diligence effectively.”
Major asset managers, including Morgan Stanley, Wells Fargo, and UBS, have approached cryptocurrency investments with caution. Morgan Stanley and Wells Fargo have both acquired shares in spot Bitcoin ETFs this year. Reports indicate that Morgan Stanley plans to reconsider its policies to permit financial advisors to recommend Bitcoin ETFs to clients. UBS is actively involved in the BlackRock Bitcoin Trust (IBIT) as an authorized participant, overseeing share creation and redemption.
Cohen anticipated that these firms would assess the role of these ETFs in portfolios, particularly as diversifiers. “By the end of this year and into the next, we will see these allocations in model portfolios, which will offer better insights into their usage by investors,” she explained.
As for BlackRock’s own model portfolios, Cohen revealed that the company has not yet incorporated crypto ETFs. BlackRock’s decision in June 2023 to apply for a spot Bitcoin ETF was a pivotal moment, potentially influencing the Securities and Exchange Commission’s approval of such funds, given BlackRock’s substantial asset base of over $10 trillion.
However, Cohen does not foresee the addition of ETFs based on the current prices of cryptocurrencies beyond the existing BlackRock Bitcoin Trust (IBIT) and BlackRock Ethereum Trust (ETHA). Recently, VanEck and 21Shares have filed for ETFs based on the spot price of Solana, the fourth-largest cryptocurrency by market cap, according to CoinMarketCap.
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