According to BlackRock’s chief investment officer for ETF funds, crypto-backed exchange-traded funds are likely to enter model portfolios by late 2024. On July 29, in an interview with Bloomberg, BlackRock’s chief investment officer for ETF and Index Investments, Samara Cohen, was asked about where major brokerage firms like Morgan Stanley, Wells Fargo, and UBS stand on introducing and promoting crypto ETF funds.
Notable Comments from a Renowned Figure
Cohen stated that brokerage firms are currently conducting risk analytics due diligence and examining the roles of Bitcoin and Ethereum in their portfolios. She expressed the following regarding the topic:
“Towards the end of this year and next year, we will see allocations to model portfolios that will guide us much more on how investors are using them.”
BlackRock expects model portfolio management to grow from the current $4.2 trillion to $10 trillion over the next five years. Earlier this month, Salim Ramji, the global head of iShares and index investments at the asset manager, said it would be very large and added:
“This is how an increasing number of custodial advisors operate, and as a result, this is how we do business with them.”
Cohen added that Bitcoin and Ethereum are two very different asset classes with different use cases but are useful as portfolio diversifiers.
Details on the Topic
Commenting on the net outflows of spot Ethereum ETF funds since their launch, Cohen said it was a strong launch and provided an access point for investors wanting Ethereum in their portfolios, so she was not concerned. Referring to Grayscale’s ETHE fund, she mentioned there were significant outflows from high-priced funds but also from proxy vehicles:
“Investors really want to get Ethereum, especially if they are going to use it in the context of a general portfolio in a trusted ecosystem.”
Grayscale Ethereum Trust (ETHE) has lost a total of $1.7 billion since the spot ETF conversion, including the latest $210 million outflow on July 29. However, about 10% of that went to the fee-free Ethereum Mini Trust fund (ETH).
According to preliminary data from Farside Investors, Ethereum spot ETF funds have recorded four consecutive outflow days and only one inflow day since the launch on July 23. Cohen also confirmed that the likelihood of a spot ETF for altcoins like Solana in the near term is low. BlackRock’s head of digital assets, Robert Mitchnick, echoed this sentiment at the Bitcoin 2024 Conference, stating he does not expect to see a long list of crypto ETFs.
