Winners and Losers in the US Spot Bitcoin ETF Race

While cryptocurrency has a reputation for drawing investors from outside the mainstream, the biggest winners of the newly-launched spot bitcoin funds are two of the best-known names in the industry.

Since bitcoin spot exchange-traded funds (ETFs) began trading in the US on January 11, investors have poured $12.1 billion (£9.7 billion) into them, of which over 80% has gone to either BlackRock’s iShares brand or Fidelity Investments.

“They’re both massive asset managers with incredible reach and the strongest distribution networks […] everyone is a client of iShares, and other firms don’t have platforms like Fidelity,” says Bryan Armour, director of passive strategies research for North America at Morningstar.

Meanwhile, the Grayscale Bitcoin Trust, now ETF – the favoured crypto-tracking ETF for investors before the advent of spot bitcoin funds – has seen $17.2 billion go out the door.

Grayscale, which heavily lobbied the Securities and Exchange Commission (SEC) for permission to launch spot bitcoin ETFs, has seen the assets in its fund plummet to $17.6 billion from $27.2 billion in February.

“It’s been a very successful launch for spot bitcoin ETFs overall, albeit with some wild price swings,” says Armour.

“The nine new bitcoin funds gathered significant inflows, while Grayscale’s newly converted ETF saw major outflows.”

Net Inflows for Spot Bitcoin ETFs

Source: Morningstar Direct. Data as of April 30 2024

The Long Road to Spot Bitcoin ETFs

The SEC’s approval of the first spot bitcoin ETFs in January was a long-awaited development for crypto enthusiasts and fund companies looking to join the fray.

Before then, the SEC prohibited ETFs from directly owning bitcoin. Investors who didn’t want to buy and hold the cryptocurrency directly could either invest in the Grayscale Bitcoin Trust or gain exposure through ETFs that tracked the price of bitcoin via futures, such as the $2 billion ProShares Bitcoin Strategy ETF (BITO). These two types of investments had downsides. Grayscale Bitcoin Trust had a 2% expense ratio fee, and both methods often struggled to track bitcoin’s price because of their structures.

The Grayscale Bitcoin Trust was the only way US investors could invest in bitcoin directly rather than through futures, besides holding the cryptocurrency itself. This was because the SEC didn’t allow spot bitcoin ETFs – funds that hold the asset directly, as opposed to tracking it via futures markets. It rejected multiple proposals to open spot bitcoin ETFs after the first application in 2013.

Grayscale sued the agency

New silver allocation drives Ruffer Investment Company April returns

In its monthly investment report, the £993.1m trust said its overall commodity position had positively driven the trust’s returns for April, noting the move into silver it had made in the previous month was the single biggest contributor to returns. The trust’s net asset value was up 0.6% for the period and now sits at £287.9m, according to data from the Association of Investment Companies. ‘The worst 12 calendar months in the history of Ruffer Investment Company’ Its share price was up 2.6% for the month, a boost to the flatlined year-to-date growth, according to the report. Ov…

Recent silver allocation drives Ruffer Investment Company April returns

In its monthly investment report, the £993.1m trust said its overall commodity position had positively driven the trust’s returns for April, noting the move into silver it had made in the previous month was the single biggest contributor to returns. The trust’s net asset value was up 0.6% for the period and now sits at £287.9m, according to data from the Association of Investment Companies. ‘The worst 12 calendar months in the history of Ruffer Investment Company’ Its share price was up 2.6% for the month, a boost to the flatlined year-to-date growth, according to the report. Ov…

Home REIT sells further 76 properties for £14.6m

In a stock exchange notice today (10 May), the trust said the sales represent 4.5% of its portfolio by value, based on  Jones Lang LaSalle’s (JLL) draft valuation in August 2023. The £14.6m from the sales is also 12.4% below the August 2023 values, Home noted. Harcus Parker weighs legal action against Home REIT sister fund amid FCA probe The latest sales bring the total number of portfolio properties sold to 585, with a further 262 properties having been exchanged on. The total gross proceeds since the sales began in August last year now stands at £125.8m which, in aggregate, an…

UK ‘outpaces’ US and eurozone for first time in three years as economy grows 0.6% in Q1

Compared to Q1 2023, GDP has increased by 0.2% in the same period this year, according to ONS data published today (10 May). UK inflation falls less than expected over March to 3.2% Both services and the production sector grew over the three-month period by 0.7% and 0.8%, respectively, while the construction sector fell by 0.9%. The period also saw increases in the volume of net trade, household and government spending, although this was partly offset by falls in gross capital formation, the ONS noted. According to Hetal Mehta, head of economic research at St James’s Place, this…

UK growth ‘outpaces’ US and eurozone for first time in three years as economy grows 0.6% in Q1

Compared to Q1 2023, GDP has increased by 0.2% in the same period this year, according to ONS data published today (10 May). UK inflation falls less than expected over March to 3.2% Both services and the production sector grew over the three-month period by 0.7% and 0.8%, respectively, while the construction sector fell by 0.9%. The period also saw increases in the volume of net trade, household and government spending, although this was partly offset by falls in gross capital formation, the ONS noted. According to Hetal Mehta, head of economic research at St James’s Place, this…

One year on, regulators still want a cure for bank runs

When large banks fail and markets tremble, it’s natural for regulators to want to know how to prevent another crisis in the future. So it is with the crisis of 2023, which took down Silicon Valley Bank (SVB) and First Republic in the US, and Credit Suisse in Europe. But to know if regulations need changing, you first have to agree on what exactly went wrong.

The US’s acting comptroller of the currency, Michael Hsu, thinks he has an answer. Or rather, two answers, to be precise. In January this

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Industry Split on SFDR Outcome

Consultation results reveal investors and industry networks undecided on whether to leave Articles 8 and 9 behind.  

The European Commission has published a summary report outlining feedback to its consultation on the future of its flagship sustainable finance disclosure regime, having found no clear consensus on how to improve the framework. 

The Sustainable Finance Disclosure Regulation (SFDR) first came into effect in March 2021, introducing disclosure requirements for fund managers to report at the entity- and product-level on how and to what extent their funds align with Article 8 and 9 fund categories. 

In the three years since, compliance with SFDR has been fraught with challenges, prompting the commission to run a three-month consultation last year proposing changes to existing disclosure requirements and questioning whether the regulation was still relevant. 

With the results now visible, it appears that while most respondents agreed that SFDR’s purpose remains valid, they question its current effectiveness, with 62% noting that SFDR has not sufficiently strengthened protection for end investors and 52% claiming it has not successfully directed capital towards sustainable and transition investments. In addition, 84% of respondents said SFDR disclosures were not useful to investors. 

Meanwhile, seventy-seven percent of respondents highlighted additional limitations within the framework, such as a lack of legal clarity on key concepts, limited relevance of certain disclosure requirements, and ongoing issues with data availability.  

A large majority of respondents called for disclosure requirements such as adverse sustainability impacts to be simplified and streamlined across the EU’s sustainable finance framework. 

“Support for SFDR remains strong, demonstrating its positive effect on improving the transparency of sustainable investments,” Pierre Garrault, Senior Policy Adviser at pan-European sustainable investment organisation Eurosif, told ESG Investor. “But many respondents – including Eurosif – find it insufficiently clear in defining key terms and acknowledge it is used as a de facto labelling regime.” 

The commission also noted “no clear preference” for either of its two proposed approaches to a potential EU fund labelling system.  

One of these options would involve designing and implementing new criteria that would more closely align with the UK’s Sustainability Disclosure Requirements (SDR), whereas the other would formalise Article 8 and 9 as

Triple Point assesses investment management arrangements

In a stock exchange notice today (9 May), the trust explained the review involves a benchmarking process to bring any agreement alternations in line with “best practice” and deliver results to shareholders. The manager is currently entitled to an annual management fee, calculated quarterly in arrears based on a percentage of the group’s net asset value as of the end of each quarter – 31 March, 30 June, 30 September, and 31 December. Triple Point Social Housing eyes portfolio sales to resume share buybacks After publishing the half-year or full-year NAV, the manager then invests 25%…