First combined gold bitcoin ETF is to be launched in Europe

The first stock market -traded product that combines gold and Bitcoin in a single fund will be debut on Wednesday.

The funds will combine a thousands of old value residues with an up -and -coming security that some have advertised as the "new digital gold" - even if the crash of Bitcoin has clouded every call in recent months that it may have had as a refuge in restless or inflationary times.

"We make Bitcoin an acceptable asset and bring gold into the 21st century," said Charlie Morris, Chief Investment Officer from Bytree Asset Management, which is behind the 21shares Bytree Bold Index ETP, which is to be noted at Six Swiss Exchange. A German listing should follow later.

While both gold ETPs and Spot-Bitcoin ETPs are widespread independently of one another-at least in continental Europe-Morris claimed that the active rebalancing strategy from bytree has improved the returns in baking testing by 7-8 percentage points per year.

The fund is weighted monthly on the basis of the historical volatility of 360 days, whereby the less volatile asset is weighted higher to maximize the risk -weighted returns. In reality, this means that gold tends to dominate the portfolio, with a weighting between 70 and 90 percent in baking testing, which goes back to 2016.

"I noticed that Bitcoin and gold were always anti-cyclical. It is clear to me that Bitcoin has always been correlated with the stock market or with risk systems in general," said Morris, until 2015 head of the absolute return at HSBC, where he managed more than $ 3 billion.

With the traditional balanced portfolio of 60 percent shares and 40 percent bonds, both investment classes have been sold at the same time, Morris said: "60/40 works in a deflation time. In an inflationary, Bold is the 60/40, in the sense that it compensates for a risky assets with a risk -conscious asset.

Morris claimed that the ETP in baking testing had been less volatile in the past five years than eight of the ten largest shares in the USA, only exceeded by Berkshire Hathaway and Johnson & Johnson.

In retrospect for 2014, the biggest loss in calendar year 2018 would have been 12.7 percent, one year in which Bitcoin broke up by 73.8 percent.

It would have achieved a cumulative return of 363 percent over the entire period 2014-21 compared to 3816 percent for Bitcoin, 58 percent for gold, 134 percent for the S&P 500 share index and 82 percent for inflation-protected US state bonds.

The annual fees are 1.49 percent, which is generally high for an ETP, but not especially for a crypto product. Morris said that the difficulty was raised to find a storageer who is able and willing to handle both physical gold and Bitcoin. Bytree finally had to split the custody between JPMorgan (for gold) and coin base (Bitcoin).

"An ETP has never had two independent deposit banks before," said Morris. "Nobody from the Old World has an idea of ​​what to do with Bitcoin."

The portfolio is reminiscent of the portfolio described by Ray Dalio, founder of the hedge fund bridewater Associates, when he was asked whether he would choose dollar, gold or Bitcoin to put it under his bed for a rainy day. " I would take the gold.

Some believe that Bold will have a broad market attractiveness.

"Investors often consider Bitcoin as an alternative system for gold and other raw materials, so it is convincing to have a fund that has both," said Todd Rosenbluth, head of research at ETF trends.

In his opinion,

private investors could benefit from the fact that the respective weightings are automatically adjusted dynamically without having to do this for themselves

However, not everyone was convinced of the advantages of the fund.

Kenneth Lamont, Senior Fund Analyst for passive strategies at Morningstar, said the key question was what someone is investing in these assets for.

"In terms of gold you can say that it is volatile, but it is usually volatile if you want it. You want it to reach a highlight in times of crisis," said Lamont.

"But does anyone believe that gold will rise indefinitely? Probably not. It is an asset that you keep in your portfolio as a ballast as protection against losses. It does not pay dividends, similar to Bitcoin.

As for the Ledger's cryptocurrency side, Lamont said: “If you don't want Bitcoin's volatility, then you may not deal with Bitcoin. In a sense, buy it because of its volatility.

"With these asset classes, volatility is not necessarily the enemy," he said, adding: "I am not sure whether this is a reasonable approach."

lamont also doubted the potential longevity of Bold.

"Ultimately, these niche funds do not survive. They may be too complicated and the fees will clearly make up a large part of it," he added.