Digital currency-backed exchange-traded funds (ETFs) are expected to be integrated into “model portfolios” by the end of 2024, according to Samara Cohen, BlackRock’s chief investment officer for ETFs and Index Investments.
In a Bloomberg interview on July 29, Cohen discussed the current state of major financial institutions, including Morgan Stanley, Wells Fargo, and UBS, in relation to onboarding and promoting crypto ETFs.
She mentioned that these institutions are now engaged in risk analytics and due diligence, particularly focusing on Bitcoin (BTC) and Ether (ETH) within their portfolios.
Cohen noted, “What will happen toward the end of this year and into next year is we will see allocations into model portfolios which will give us much more of a steer into how investors are using them.”
Model portfolios, commonly offered by large brokerage firms, are diversified investment strategies that balance risk and return, providing investors with pre-designed templates or “recipes” for investing.
BlackRock anticipates that the management of model portfolios will grow from the current $4.2 trillion to $10 trillion over the next five years.
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Earlier in July, Salim Ramji, global head of iShares and index investments at BlackRock, commented on the growing trend, stating, “It’s going to be massive,” and emphasizing the importance of fiduciary advisers in this shift.
Cohen highlighted that Bitcoin and Ether, though distinct in their use cases, serve as “portfolio diversifiers.”
Addressing the recent net outflows from spot Ether ETFs, she expressed no concern, noting the strong initial launch and the role these ETFs play as an “access point” for investors seeking exposure to ETH.
She remarked on the outflows from more expensive funds, such as the Grayscale Ethereum Trust, and noted investor interest in incorporating ETH into broader portfolios within trusted ecosystems.
Cohen also indicated that a spot ETF for altcoins like Solana (SOL) is unlikely in the near future.
Robert Mitchnick, BlackRock’s head of digital assets, echoed this sentiment at the Bitcoin 2024 conference, saying, “I don’t think we’re gonna see a long list of crypto ETFs.”
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