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Advisors Embrace Bitcoin ETFs, Allocate 3.5% of Client Households

Last Updated March 19, 2024 2:16 PM
Teuta Franjkovic
Last Updated March 19, 2024 2:16 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Financial advisors warming to Bitcoin ETFs, suggesting a 3.5% average allocation.
  • The rise of the ETFs brings more portfolio shuffle and less new cash.
  • Financial advisor platforms play a key role in facilitating access to the funds for investors.

Grant Engelbart, Vice President and Investment Strategist at Carson Group, highlighted  the increasing appeal of Bitcoin ETFs among financial advisors during a recent interview with Bloomberg.

Engelbart revealed  that advisors typically allocate around 3.5% of client portfolios to Bitcoin ETFs.

Bitcoin Shuffle, Not New Cash: Advisor Platform Chief on ETF Uptake

Engelbart attributed  the swift uptake of these ETFs to Carson Group’s quickly facilitating access to the products following their debut.

Regarding inquiries about the origin of funds for Bitcoin ETF acquisitions, Engelbart clarified  that investors frequently redistribute from current holdings within their stock portfolios. He observed funds transitioning from growth or high-risk equity positions towards BTC-focused funds. The Bitcoin-related investments usually constituted a minor portion of the total portfolio, typically below 5%.

More Rotation Than New Blood, Says Advisor Platform Chief

Engelbart emphasized  that, although there’s been a noticeable trend towards the crypto ETFs, it predominantly involves the rotation of existing assets rather than the influx of new capital into the market.

He also noted  that many registered investment advisors (RIAs) have yet to begin investing in Bitcoin exchange-traded funds. This is, he said, because they’ve recently completed their initial three months of availability.

Recently, Carson Group greenlit four US spot Bitcoin exchange-traded funds (ETFs) on its platform. This decision comes after the United States Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs. Carson Group, boasting $30 billion in assets under management (AUM) and serving over 150 partner firms, made the move to diversify its offerings.

Approved spot funds on Carson’s platform include Blackrock’s Ishares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC). Meanwhile, Bitwise Bitcoin Fund (BITB), and Franklin Bitcoin ETF (EZBC) finish off the group.

Spot Bitcoin ETFs: Platform Approval Key for Growth

For ETF issuers, accessing financial advisors and their retail clients is pivotal for broadening their investor base. Platforms such as Fidelity and Charles Schwab have already integrated spot Bitcoin ETFs for registered investment advisors to access on behalf of their clients.

Conversely, some platforms are adopting a cautious “wait-and-see” stance. Notably, Vanguard has declared its lack of intention to facilitate the trading of spot Bitcoin ETFs through its platform.

Bitwise CEO Hunter Horsley recently emphasized  the significant impact platform approvals can have on the growth of ETFs. He highlighted that financial advisors collectively manage trillions of dollars, making platform approvals a substantial catalyst for expansion. Horsley further explained that more than half of US wealth is tied to platforms. Therefore, investors can only utilize a product once it has gained approval.

He said :

“We frequently hear ‘I want access to Bitcoin but our platform hasn’t approved anything yet.’ The platforms are busy but now that there are ETFs and a few over a billion AUM, they’re doing the work.”

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