One of the world’s biggest asset manager has added bitcoin to one of the most preferred fund for ordinary and passive investors.
The Blackrock Global Allocation Fund invests globally in equity, debt and short term securities, of both corporate and governmental issuers, with no prescribed limits, it says, further adding:
“In normal market conditions the Fund will invest at least 70% of its total assets in the securities of corporate and governmental issuers.
The Fund generally will seek to invest in securities that are, in the opinion of the Investment Adviser, undervalued.
The Fund may also invest in the equity securities of small and emerging growth companies. The Fund may also invest a portion of its debt portfolio in high yield fixed income transferable securities. Currency exposure is flexibly managed.”
For individuals like nurses or teachers that want to invest some of their savings, but do not have time or will to track the market, the global allocation fund is the one usually recommended because it is the most diversified and tries to track global growth, shielding it from events in one country.
For this specific fund, these nurses and teachers as well as other investors, with the fund managing nearly $15 billion in assets, will also sort of be buying bitcoin alongside equities and other assets as Blackrock said in a filing:
“The Fund may invest in cash-settled bitcoin futures that are traded on commodity exchanges registered with the Commodity Futures Trading Commission.”
This is one of the first general fund to add bitcoin to their package, indicating the asset has become sufficiently established as a diversifier, and is a worthy addition even in a very conservative portfolio.
Global allocation funds are issued by many other providers as well, including Vanguard. However Greg Davis, Vanguard’s Chief Investment Officer, said last year:
“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.”
Numerous academic studies however have shown that bitcoin increases risk adjusted returns.
The crypto of course has its ups and downs, but for funds like Global Allocation, which are meant to mainly be for long term investment, the bitcoin returns over a period of four years or more have generally been up.
Other funds therefore may well follow Blackrock especially if in two years their fund shows significant returns that beat their competitors.
All this indicating crypto is sort of going big league. Slowly, but passive funds may start adding the asset, and that’s a very big market.