Popularity of crypto funds sparks growing interest from managers
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Fidelity, UBS and State Street Global Advisors have confirmed that, like rivals BlackRock and Invesco, they are looking into the potential of offering exposure to cryptocurrencies, such as bitcoin.
Assets in European exchange traded products and mutual funds with cryptocurrency exposure have topped €10.5bn, according to Morningstar data, showing the potential appeal of these products for asset managers.
XBT, part of CoinShares, is the largest provider in Europe, with assets of €5.4bn across eight products domiciled in Sweden and Jersey, followed by Swiss group 21Shares, which manages €2.1bn across its range.
Matteo Andreetto, head of SSGA’s SPDR exchange traded fund business for Europe, the Middle East and Africa, said: “Clearly, we are looking at the space and evaluating the way the space is evolving.
“Clients are not only asking about cryptocurrencies but also specifically SPDR crypto products. They like the fact we are a robust, safe pair of hands.”
Fidelity said it was “keeping close to the evolution of cryptocurrencies [ . . . ] as part of a wider exploration of the potential for digital assets, and the distributed ledger technology that sits behind them”.
“As you would expect, Fidelity International is exploring the potential of this technology for the benefit of clients,” Fidelity added.
Clemens Reuter, global head of ETFs at UBS Asset Management, said: “[Cryptocurrency is] an area everyone needs to look at the moment.” However, he added: “As of today, we have not decided to launch anything.”
In May, Invesco told Ignites Europe that it was “investigating” digital asset exposure for ETPs.
Jose Garcia-Zarate, associate director, passive strategies at Morningstar, said he expected more cryptocurrency products to be launched as part of the “gimmicky” trend.
“ETFs lend themselves to these sorts of exposures,” he added.
However, the asset managers also pointed to the hurdles involved in entering the cryptocurrency space.
Reuter noted that investing in cryptocurrencies was not yet permitted for Ucits funds.
Andreetto said SSGA would not launch an ETF until the group was “sure” it could reach the “very high bar” to sit alongside its other ETFs and “have all the features of [a] SPDR product”.
“Moving into an ETP would be a deviation for us,” he adds.
European ETPs and funds giving cryptocurrency exposure generated an average return of 461.7 per cent over the 12 months to the end of October. They have achieved an annualised return of 116.3 per cent over three years, Morningstar data show.
But Garcia-Zarate said investors should be “careful what they wish for” with cryptocurrency products.
Investors “need very in-depth due diligence” to understand how cryptocurrencies and related futures markets work, he said.
*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.