The US-listed exchange-traded fund (ETF) WisdomTree Managed Futures Strategy Fund (WTMF) has added an allocation of approximately 1.5% to bitcoin (BTC) futures, citing the potential for “significant” returns uncorrelated with the broader market.
The fund’s allocation has been made in the form of regulated bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), which is the same bitcoin derivative instrument that backs all US-listed bitcoin ETFs.
The announcement from WisdomTree said that the fund will not invest in bitcoin directly, which is in line with the position taken by many traditional financial institutions in the US.
In terms of the reason why WisdomTree made the choice to invest in bitcoin futures, the firm said that the asset is attractive because of “the potential for significant absolute returns.”
However, it is not just the potential returns that makes bitcoin attractive, they added, explaining that a lack of correlation with other assets is also an important consideration.
“Bitcoin has historically been an excellent diversifier from other traditional asset classes,” WisdomTree said.
“Our objective is to provide investors with this exposure in a risk-controlled manner via a systematic long/flat trend-following strategy that reacts quickly to changing market conditions,” they added.
And while the allocation so far has only been 1.5% of the fund, the fund’s mandate allows up to 5% of its assets to be made up of bitcoin futures, according to the fund’s website.
Meanwhile, according to data compiled from MicroStrategy’s overview of returns of different assets versus BTC, a total of 212 companies out of the 500 that make up the broad S&P 500 index, did perform better than bitcoin on a 12-month basis as of January 6.
WTMF is an actively managed exchange-traded fund (ETFs) that follows “a systematic trend-following strategy.” The ETF is designed to generate “positive total returns in rising or falling markets,” with an aim of keeping the fund’s performance uncorrelated with the broader stock and fixed income market, the website further said.
WTMF’s top holding is currently US Treasury Bills, which make up more than 42% of the fund’s assets. The fund is up by almost 18% on a 1-year basis, but nearly unchanged over the past 10 years, according to its website.
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