By
Bena Ilyas
April 18th, 2024
BlackRock is now providing Bitcoin exposure to the ordinary and passive investors of its Global Allocation Fund.
Globally-renowned asset manager BlackRock (NYSE: BLK) has added Bitcoin (BTC) to its global allocation fund. Reports state that ordinary and passive investors can now gain BTC exposure via the BlackRock Global Allocation Fund. The highly coveted fund invests globally in both corporate and government-issued equity, debt, and short-term securities.
BlackRock’s Global Allocation Fund executes these investments without any prescribed limits. In addition, the fund looks to invest no less than 70% of its total assets in these securities of corporate and government issuers. Yet still, the fund could also choose to invest in the equity securities of minor and emerging growth companies. However, the BlackRock Global Allocation Fund demonstrates diverseness by investing a portion of its high-yield fixed-income transferable securities in its debt portfolio. Moreover, currency exposure is also flexibly managed.
Bitcoin Addition Could Grow BlackRock Fund AUM Further
The BlackRock Global Allocation Fund presently manages roughly $15 trillion in assets, and the addition of Bitcoin should see these numbers swell further. Furthermore, this BTC development should also see white-collared individuals such as nurses and teachers buy Bitcoin alongside other equities and assets. The fund is usually recommended to white-collar professionals that want to invest savings but lack time to track the market. The reason why it sees such high recommendation value is due to its diverse nature. In addition, the BlackRock global fund also tries to track global growth, thereby protecting it from unsavory events in one country.
In a filing, BlackRock said:
“The Fund may invest in cash-settled bitcoin futures that are traded on commodity exchanges registered with the Commodity Futures Trading Commission.”
The addition of Bitcoin to the BlackRock fund also speaks volumes about how far the leading crypto has come. The fund is one of the first general ones to add BTC to its package. Furthermore, it also suggests that Bitcoin is now a worthy addition to even a conservative portfolio.
While many other providers also issue global allocation funds, Vanguard’s chief investment officer Greg Davis said:
“Although we see merit in supporting the technology behind cryptocurrency, we feel it’s best to stick to the investing principles that have made Vanguard a reliable choice for investors. So when it comes to cryptocurrency, we take the same approach and steer our clients toward time-tested products.”
Davis’ assertion hints at the well-documented volatility of Bitcoin and most crypto in general. In addition, several previous academic studies also explicitly show that Bitcoin increases risk-adjusted returns.
BlackRock ‘Long-Haul’ Philosophy Plays Well to BTC Price Trajectory
Despite the roller-coaster nature of the crypto price trajectory, the BlackRock fund might greatly benefit from the BTC addition. The reason is that the Global Allocation is for long-term investments, and Bitcoin returns over at least four years are usually good.
Assumptions abound within the traditional finance space that other funds may eventually follow BlackRock’s lead. The possibility of similar funds abounding increases if the BlackRock fund shows significant returns after two years.