- WisdomTree’s Enhanced Commodity Strategy Fund (GCC) previously focused on only four commodity sectors: Energy, Agriculture, Industrial Metals, and Precious Metals. Now, it includes bitcoin.
- Diversified funds of this kind began adding Bitcoin earlier this year. For instance, BlackRock added BTC to its Global Allocation Fund.
- The Morgan Stanley Europe Opportunity Fund uses Grayscale’s GBTC with Bitcoin exposure, and BlackRock’s Global Fund utilizes cash-settled futures.
WisdomTree, one of the largest Exchange Traded Fund (ETF) managers with $94 billion in assets, has included Bitcoin in its Commodity ETF.
WisdomTree Includes Bitcoin in Commodity ETF
WisdomTree, one of the largest Exchange-Traded Fund (ETF) managers with $94 billion in assets, has become the first company in the world to add Bitcoin to a commodity ETF. WisdomTree’s Enhanced Commodity Strategy Fund (GCC) previously focused on only four commodity sectors: Energy, Agriculture, Industrial Metals, and Precious Metals. Now, it includes bitcoin.
This fund has allocated 5% of its assets to Bitcoin, being the sole cryptocurrency among them. The fund has around $200 million in assets, and $4 million of this is related to Bitcoin. So far, it can be said that it’s the only commodity ETF that includes cryptocurrencies alongside commodities like cattle and copper.
WisdomTree has also added Bitcoin into its Managed Futures Strategy Funds (WTMF). This is a diversified fund that invests in stocks, commodities, currencies, and interest rates, currently containing around $4 million in Bitcoin.
These diversified funds began adding Bitcoin earlier this year. For example, BlackRock added BTC to its Global Allocation Fund, Morgan Stanley added it to its Europe Opportunity Fund, and Saba Capital added it to its Income & Opportunities Fund. Such funds tend to follow global growth trends and aim for diversification by investing in almost anything.
However, Bitcoin inclusion in these diversified funds is still relatively small since fund managers have only begun allocating to this space. Academic studies have concluded that at least 1% allocation is needed. With commodity ETFs potentially totaling around $200 billion, 1% would mean $2 billion in Bitcoin. Interestingly, WisdomTree has chosen 5% instead of the currently recommended 1% to 10% allocation, as they begin to examine Bitcoin’s role in risk-adjusted returns.
At the 5% level, Bitcoin can expect inflows of $10 billion from commodity ETFs alone. Of course, WisdomTree settles its futures with cash. The company states:
“The Enhanced Commodity Strategy Fund (GCC) and the Managed Futures Strategy Fund (WTMF) may invest in Bitcoin futures contracts up to 5% of their net assets. GCC and WTMF invest in Bitcoin futures listed on the CFTC-registered futures exchange, which is cash-settled.”
Morgan Stanley Europe Opportunity Fund with GBTC
The Morgan Stanley Europe Opportunity Fund uses Grayscale’s GBTC with Bitcoin exposure, and BlackRock’s Global Fund utilizes cash-settled futures. While some fund managers may be waiting for a freely tradable exchange-traded fund (ETF) to become available, as Grayscale’s GBTC has applied to convert itself into a freely tradable ETF for accredited investors. Additionally, BlackRock has applied to offer a bitcoin spot ETF.
As a result, some fund managers might be waiting for Bitcoin to become available as a freely tradable asset in stock form before allocating it to diversified funds or commodity funds. Particularly, the allocation of Bitcoin in these passive funds is a new development and may become part of all diversification or commodity-focused funds as institutional investors begin to enter the stage.
