Morgan Stanley fund opens possibility of investing in spot Bitcoin ETF

Morgan Stanley’s Europe Opportunity Fund has opened its doors to spot Bitcoin ETF investments.

The fund may gain exposure to spot Bitcoin ETFs, but this must remain less than 25% of the fund’s assets, according to Form N-1A filed Tuesday. The fund’s core objective is to invest primarily in European companies, although the fund does hold equities. grayscale Bitcoin BTC

+7.30%
In the past, I trusted GBTC.

Eric Balchunas, senior ETF analyst at Bloomberg, said funds could add such disclosure statements as a risk mitigation strategy if they have exposure to Bitcoin ETFs. “They are doing preventative defense. “I hope they don’t make any mistakes,” he said.

But Balchunas noted that the fund has had low inflows over the past few years and, while it has performed well, has underperformed the S&P 500. As a result, he said, this could be part of a growth strategy.

“So if you run this fund, it’s going to be difficult. Because Europe doesn’t really have some of the growth stories that we find in the United States. And it might just be trying to find a little kick, a little edge,” he said.

On the exposure side, he said he would be shocked if it was more than 2% of the fund’s assets. He cited Appleseed Mutual Fund, which invested 1.1% in Bitcoin, as a reasonable amount.

Mutual fund discloses exposure first

Balchunas pointed out that mutual funds are regulated under the 1940 Act, which is very strict and requires extensive disclosures. As a result, he said, this is the reason for mutual funds. three of them until now — are the first people to disclose their exposure to Bitcoin.

“So over the next few months we will see a larger group of holders. Right now, it makes sense to look at mutual funds first. “It’s not because we added it first, but because we have to report it first,” he said.

Balchunas added that while Bitcoin exposure may not be suitable for some niche funds, most fund managers will want the option to access this new ETF. “So this seems to be part of what ETFs are moving forward with through this huge machine called TradFi,” he said.

Correction: This story has been updated with additional details about Morgan Stanley’s GBTC holdings.

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