Crypto ETFs to hit ‘model portfolios’ by year-end: BlackRock
Digital currency-backed exchange-traded funds will enter “model portfolios” by the end of 2024, according to BlackRock's chief investment officer, ETF.
In a July 29 Bloomberg interview, BlackRock's chief investment officer for ETFs and index investments, Samara Cohen, was asked where big wire houses like Morgan Stanley, Wells Fargo and UBS are getting on board with introducing crypto ETFs.
Cohen said wirehouses are now looking at risk analyses, due diligence and the roles of Bitcoin (BTC) and Ether (ETH) in their portfolios.
“What's going to happen later this year and next year is we're going to see the allocation of model portfolios, which will give us more guidance on how investors should use them.”
Model portfolios offered by large, full-service brokerage firms generally take a different approach to investing, targeting exposure and return based on a clear strategy.
They can be thought of as pre-designed investment strategies that serve as ready-made templates or “recipes” for investing.
BlackRock expects model portfolio management to grow from $4.2 trillion to $10 trillion over the next five years.
“It's the way more and more fiduciary advisors do business, and as a result, it's the way we do business with them,” Salim Ramji, global head of iShares and index investments at the asset manager, said earlier this month.
Cohen added that bitcoin and ether are two very different asset classes with different use cases but are useful as “portfolio diversifiers.”
Commenting on the net inflow of Ether ETFs since their launch, Cohen is not concerned that it's been a strong launch and that they provide an “access point” for investors looking for ETH in their portfolios.
She said there have been many exits from high-value funds, perhaps related to grayscale ETHE, but also from “proxy vehicles” because:
“Investors want to gain exposure to ETH, especially if they want to use it in the context of an ecosystem-wide portfolio that they trust.”
Related: BlackRock Sees ‘Very Little Interest' in Crypto ETFs Beyond Bitcoin, Ethereum
The Greyscale Ethereum Trust (ETHE) has invested a total of $1.7 billion since its conversion from the spot ETF, including a $210 million outlay on July 29. However, about 10% went into the zero-fee Ethereum Mini Trust (ETH). ).
Early data from Farside Investors shows that Ether spot ETFs have now recorded four consecutive days of outflows and just one day of inflows since its launch on July 23.
Cohen confirmed that there is little chance of an ETF becoming a niche for altcoins like Solana (SOL) in the near future. “I don't think we'll see a long list of crypto ETFs,” BlackRock head of digital assets Robert Michnick echoed at the Bitcoin 2024 conference.
Magazine: Trump's Bitcoin Push, Ether ETF's First Spot, and More: Hodlers Digest, July 21-27
