Morgan Stanley Fund Plans to Invest in Spot Bitcoin ETFs!

• According to an N-1A form filed on Tuesday, the fund may be exposed to spot Bitcoin ETFs, but it should be less than 25% of the fund’s assets.
• Balchunas stated that the fund could add this disclosure language as a risk mitigation strategy in case it has no exposure to Bitcoin ETFs in any way.
• Balchunas noted that investment funds are subject to the strict 1940 law, which requires robust disclosures.

Investment bank Morgan Stanley’s European fund plans to invest in spot Bitcoin ETFs; Here are the details!

Morgan Stanley Fund Opens Door to Spot Bitcoin ETFs

Morgan Stanley’s Europe Opportunity Fund has opened the door to investing in spot Bitcoin ETFs. According to an N-1A form filed on Tuesday, the fund may be exposed to spot Bitcoin ETFs, but it should be less than 25% of the fund’s assets.

However, the primary purpose of the fund is to invest primarily in European companies, naturally not inclined toward investments like Bitcoin. Eric Balchunas, a senior ETF analyst at Bloomberg, said that the fund could add this disclosure language as a risk mitigation strategy in case it has no exposure to Bitcoin ETFs. Balchunas stated, “They’re doing a preventive defense. They don’t want to make any mistakes.”

However, Balchunas mentioned that the fund has had low inflows in recent years and, despite its good performance, has underperformed compared to the S&P 500. Therefore, he said that this situation could be part of a growth strategy.

Balchunas said, “So, if you’re managing this fund, it must be tough because Europe doesn’t have some of the names that have just been growth stories located in the U.S. So, maybe they’re trying to find something a little bit.”

In terms of exposure, he said he would be surprised if it exceeded 2% of the fund’s assets. As a sensible amount, he referred to Appleseed investment fund, which has invested 1.1% in Bitcoin.

The first to disclose exposure

Balchunas noted that investment funds are subject to the strict 1940 law, which requires robust disclosures. Therefore, he said that the investment funds disclosing Bitcoin exposure are the first ones because they may want to have access to these new ETFs.

Analyst Balchunas said, “So, over the next few months, we’ll see a bigger owner come in. Right now, it makes sense to see the investment funds first because they need to be not the first to add but the first to report.”

Balchunas added that while Bitcoin exposure might not make sense for some niche funds, most fund managers would want to have the option to access these new ETFs. The ETF analyst said, “So, I think it’s part of the massive machine known as TradFi, ETFs making their way into it.