Union Investment says it has completed pilot testing of Bitcoin certificates and now plans to add the cryptocurrency to funds in small quantities.
As the business magazine Bloomberg reports, Union Investment, one of the largest domestic asset managers based in Frankfurt am Main, plans to include Bitcoin in funds. According to the report, the experimental phase with bitcoin certificates is over.
“We are considering adding bitcoins in small amounts of no more than 1 percent to 2 percent to a handful of other funds for private investors,” Daniel Bathe, portfolio manager at the fund company, told Bloomberg. As a fund service provider of the cooperative banks in Germany (Volksbanken Raiffeisenbanken), Union Investment manages almost 430 billion euros (as of the end of June). So far, he did not want to reveal more details about the date, but the fourth quarter of the current year is possible.
Union Investment: Only the beginning?
With the plans, the traditional financial world takes another step towards digital assets and enables a broader mass to jump on the crypto bandwagon, as Bloomberg writes. The asset manager’s push is yet another example of how investing in bitcoin and the like is becoming increasingly easy, even in local climes, he said. DZ Bank analyst Sören Hettler comments, “A simplified entry into the market segment for institutional and private investors is a development that has been on the horizon for some time and is considered a significant influencing factor for Bitcoin price gains between autumn 2020 and the beginning of this year.”
At the same time, however, Hettler also warns of the enormous risks of the crypto market. “As an admixture in a portfolio” crypto stocks like BTC could however “make sense”, he admits. Union Investments Daniel Bathe also sees it that way: “Bitcoin is well suited for the diversification of portfolios, because in the longer term they often show no correlation to classic asset classes such as equities or bonds,” says the portfolio manager.
It remains to be seen whether the fund companies of the Sparkasse (Deka) and Deutsche Bank (DWS) will follow suit.
For Dr. Sven Hildebrandt, the managing director of DLC Distributed Ledger Consulting GmbH, the move came as little surprise, as he tells Yellow Rocket Agency, “Union Investment’s move was expected – which does not mean it should be undervalued. Any asset manager that wants to achieve the best for their clients – and that’s the job of an asset manager – will be invested in crypto stocks in the future. What’s exciting is that Union is apparently taking the first steps more publicly in the retail business, which equally shows a statement about the level of innovation in institutional investing.”
“So there is still a lot to do,” Hildebrandt said.