A post to understand BlackRock's $150 billion model portfolio adds Bitcoin spot ETF
According to Bloomberg, global asset management giant BlackRock will allow the allocation of its Bitcoin spot ETF "IBIT" in its $150 billion model portfolio. The portfolio can use 1% to 2% of its funds to BlackRock's $48 billion IBIT.
Although this accounts for only a small part of BlackRock's model portfolio business, the move has brought potential new sources of funding to IBIT amid current market sentiment. BlackRock’s model portfolio offers financial advisors a variety of ready-made investment strategies that have grown rapidly in recent years, and its portfolio adjustments tend to lead to significant capital flows.
Michael Gates, chief portfolio manager of BlackRock Target Configuration ETF Model Portfolio, said: "We are optimistic about the long-term investment value of Bitcoin and believe it can provide a unique risk diversification advantage for the portfolio."
Due to the high volatility of Bitcoin, BlackRock sets its investment ratio between 1% and 2%. BlackRock Investment Research Institute pointed out in a December 2023 report that more than 2% of allocations will significantly increase the risk of Bitcoin in the overall portfolio.
IBIT is expected to attract more institutional investors
IBIT was listed in January 2024 and quickly became one of the most successful ETFs in history, attracting more than $37 billion inflows last year. Despite recent market demand declines (next $900 million in the past week), BlackRock said demand from financial advisers to allocate Bitcoin in their model portfolios remains strong.
Eve Cout, head of portfolio design and solutions at BlackRock Wealth Management, noted that investors generally want to increase allocation of alternative assets, but they need professional guidance to determine the appropriate investment scale, strategy and risk rebalancing.
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