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$100 Billion Hedge Fund Man Group Plans to Add Bitcoin to ‘Investment Universe’

Last Updated March 4, 2021 5:01 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:01 PM

Historic British hedge fund Man Group says that it will likely add bitcoin to its “investment universe” once U.S. exchange CME launches bitcoin futures contracts next month.

The London-based Man Group, which was founded in 1783 as a sugar cooperage and brokerage, is one of the world’s largest hedge funds and has close to $100 billion in funds under management.

Responding to the news that the Chicago-based derivatives market CME intends to launch bitcoin futures during the second week of December, Man Group CEO Luke Ellis told Reuters  that the firm intends to add bitcoin to its “investment universe” once the futures contracts are officially listed for trading.

“Conceptually digital currencies are an interesting thing,” he said. “It’s not part of our investment universe today – it could be. If there is a CME future on bitcoin, it would be.”

Ellis noted that because digital currencies do not have backing from central governments, they face significant obstacles to achieve mainstream adoption. However, unlike JPMorgan CEO Jamie Dimon and other bitcoin skeptics, he believes that cryptocurrencies still have potential as investment products.

“There is a big difference between a digital currency and a traditional currency…Traditional ones are supported by governments who have armies and tax men that can make people follow their rules, and digital ones don‘t,” he continued. “But that doesn’t invalidate digital currencies at all.”

Ellis did not state categorically whether the firm will trade CME’s bitcoin futures or explore direct engagement with the cryptocurrency markets — as investment banking firm Goldman Sachs has reportedly considered doing. Either way, the announcement is further confirmation that mainstream institutional investors are eying an entry into the bitcoin ecosystem following the deployment of professional trading products.

Because CME’s bitcoin futures will trade in a regulated environment, the exchange will have “bumpers” to prevent the market from moving too far in one direction during a single day of trading. The operator can also pause trading during periods of extreme volatility. Leo Melamed, chairman emeritus of CME, stated recently that he believes this framework will allow the exchange to “tame” bitcoin into a mainstream financial instrument.

Consequently, analysts expect that CME’s launch of bitcoin futures — along with the derivatives already offered by LedgerX — will attract large amounts of capital from Wall Street firms, reducing bitcoin’s volatility and enabling it to mature as an asset class.

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