TOBAM, a France-based asset management company, has introduced a bitcoin mutual fund to offer an alternative investment for institutional investors seeking exposure to bitcoin. The fund, according to the company, is unregulated.
TOBAM’s bitcoin fund precedes the Chicago Mercantile Exchange’s plans to list bitcoin futures. In seeking to address challenges investors have faced in gaining exposure to bitcoin, the fund integrates the management of blockchain forks and takes measures to mitigate the risk of loss and theft, according to the TOBAM website.
Bitcoin, while volatile, offers investors diversification, according to TOBAM.
Access For Insitutional Investors
Bitcoin, which is not regulated by national financial regulatory bodies like the Securities and Exchange Commission in the U.S. and the Financial Conduct Authority in the U.K., cannot be held by most exchange-traded funds or by traditional mutual funds, according to the Financial Times.
TOBAM’s fund is not traded on an exchange and does not qualify as a European mutual fund known as a Ucit, according to the Financial Times. The fund does, however, have daily liquidity derived from market closing prices, a characteristic it shares with what are known as Ucits mutual funds.
French Regulator Grants Approval
TOBAM founder Yves Choueifaty said the fund required permission from France’s regulatory authority, Autorité des Marchés Financiers (AMF), to be launched. He also said the company had to convince the AMF the fund has a framework that protects investors.
Investing directly in bitcoin poses challenges in the choice of platform and in maintaining the security of custody in addition to protocol challenges, such as hard forks, according to Christophe Roehri, TOBAM’s head of business development.
The fund’s auditor is PwC and its custodian is Caceis, the asset servicing banking group of Credit Agricole.
Choueifaty said he will be disappointed if the fund does not grow to more than $400 million in two to three years. TOBAM ‘s founder also believes cryptocurrencies will establish durable standards in the savings and financial markets.
TOBAM’s Investment Philosophy
TOBAM, which manages $8.8 billion in fixed income and equities according to its website, follows a diversification approach that uses patented research and mathematical definition of diversification to provide exposure in both the fixed income and equity markets.
“Our goal is to take control of these operational challenges in order to facilitate access for qualified investors willing to gain exposure to bitcoin,” Roehri said. “All of that under the format of a fund.”
Mainstream financial advisers and portfolio managers have claimed most institutional investors remain far away from considering investing in bitcoin. Launched in 2005, TOBAM is employee owned. The California Public Employees Retirement System and Amundi are minority shareholders since 2011 and 2012, respectively. The team has 49 professionals from 17 countries.
TOBAM has developed cyber security systems over the past 12 years. Its development team includes researchers, risk management specialists, engineers and computer specialists. In addition to being regulated by Autorité des Marchés Financiers, TOBAM is an SEC-registered investment adviser. It is also registered in Canada and South Korea.
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