Adviser interest grows for crypto ETFs
Financial advisers are demonstrating growing interest in crypto ETFs, with momentum pushing assets in these products past $800 million.
According to Global X, there is a growing appetite for digital assets within regulated vehicles, and the products have seen $253 million in net inflows since the start of the year.
Over one year to 31 August, four crypto ETFs have been among the top-performing ETFs, with returns of more than 83 per cent. These were the Global X 21Shares Bitcoin ETF (83.6 per cent), DigitalX Bitcoin ETF (85 per cent), VanEck Bitcoin ETF (88.9 per cent), and the Monochrome Bitcoin ETF (92.1 per cent).
Their strong performance was beaten only by the Betashares Gaming and eSports ETF, which also returned 92.1 per cent.
However, while they have demonstrated good performance over one year, their volatile nature means performance over one month to 31 August is among the worst, with all four funds losing more than 8 per cent.
Despite this, the ETF provider said improvements to regulations and market infrastructure are helping improve access to crypto for financial advisers, who have tended to shy away from the asset in the past.
Global X said: “As regulatory clarity improves and market infrastructure matures, crypto ETFs are likely to remain a key access point for investors seeking diversification, hedging against fiat currency, or asymmetric growth potential.
“We continue to see strong and growing interest from investors and advisers as crypto becomes more widely accepted as an alternative asset class.”
However, it noted the majority of flows still come from mass affluent retail investors, as some licensees are hesistant to recommend it on their approved product lists.
Speaking at Momentum Media’s Australian Wealth Management Summit in Sydney, Global X investment strategist Marc Jocum said he believed an ETF was the right wrapper to help advisers access crypto because of its flexibility.
“It’s liquid. They’re traded daily if you need to. Portfolio rebalancing, which is incredibly important. If you’re holding too much, let’s say you have a 2 per cent allocation in bitcoin, it does an incredible run and all the sudden you’re taking a bit too much risk for the portfolio, you want to dial that back, imagine having to deal with multiple exchanges, rebalancing, depositing cash,” Jocum said.
“The ETFs make it so much easier to do. A lot of crypto natives don’t like the ETFs because it is, like I said, the traditional finance mixed with the decentralised finance, but it’s just an access point.”
Recommended for you
AMP CEO Alexis George has said addressing Australians’ retirement concerns should be "front and centre for policymakers” after its research revealed only half of Australians are confident about their retirement.
LGT Crestone has announced a rebrand, marking a “decisive milestone” following its acquisition of Commonwealth Bank’s high-net-worth financial advisory business in June.
The launch of a low-cost menu for BT Panorama will allow advisers to service a wider range of clients from one platform and potentially run a more profitable business, according to specialist Recep Peker.
Retail investment into private credit funds could surpass that of sophisticated investors, according to ASIC, but the regulator admits it is unsure how and where these individuals are first being introduced to the vehicles.
