Morgan Stanley is well known for its leadership in alternative investments and the private market sector, with assets under management exceeding $150 billion.
Wall Street banking giant Morgan Stanley is currently conducting due diligence to include spot Bitcoin ETF products on its brokerage platform. As one of the largest US broker-dealer platforms, Morgan Stanley has been assessing the possibility of offering spot bitcoin ETFs to its clients following the US Securities and Exchange Commission’s approval last month in January.
In a recent filing, Morgan Stanley’s Europe Opportunity Fund has updated its language to permit investment in spot Bitcoin ETFs. According to a form N-1A submitted on Tuesday, the fund may seek exposure to spot Bitcoin ETFs, with the stipulation that such investments remain under 25% of the fund’s assets. While the fund’s primary focus is on investing in European companies, it has previously held shares of the Grayscale Bitcoin Trust (GBTC).
Bloomberg’s senior ETF analyst Eric Balchunas suggested that the fund might be incorporating this disclosure language as a precautionary measure in case it ever gains exposure to Bitcoin ETFs.
Morgan Stanley is well known for its leadership in alternative investments and the private market sector, with assets under management exceeding $150 billion. It was also one of the first major US banks to provide affluent clients access to Bitcoin funds in 2021. During its first-quarter earnings call in April 2021, the bank confirmed offering its wealth management clients exposure to Bitcoin through a pair of external crypto funds.
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Balchunas highlighted that the Morgan Stanley fund has experienced minimal inflows in recent years, and although its performance has been satisfactory, it has lagged behind the S&P 500. Consequently, he suggested that this move could potentially be part of a growth strategy. He added:
“So it is interesting if you’re running this fund it’s got to be tough, because Europe doesn’t really have some of these names that you find in the US that have just been the growth story. And, so it might be this one just trying to look for a little kick, a little edge.”
The Bloomberg strategist also expressed skepticism regarding the extent of exposure, suggesting it would likely not exceed 2% of the fund’s assets. He cited the Appleseed mutual fund’s allocation of 1.1% to bitcoin as a feasible benchmark.
Balchunas further highlighted the stringent regulations governing mutual funds under the 1940 act, which mandate thorough disclosures. This explains why mutual funds are among the first to disclose any kind of Bitcoin exposure.
Furthermore, he emphasized that while Bitcoin exposure may not suit every niche fund, most fund managers would likely seek the option to access these new ETFs.
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