BlackRock Exec: Crypto ETFs Coming to Model Portfolios

Bitcoin and Ethereum exchange traded funds will be part of model portfolios in the near future, BlackRock's Chief Investment Officer of ETFs and index investments told Bloomberg Television on Monday, a development fueled by major broker dealers' growing comfort with the products.

The interest of the broker dealers, who manage trillions in assets, will serve as a catalyst for investors to include these funds among their holdings, Samara Cohen said.

"That is exactly what I think will be the story of this year and next year," Cohen said. "They are doing their jobs, and their job is risk analytics, due diligence.

Morgan Stanley, Wells Fargo, UBS and other large asset managers have approached crypto investments cautiously . Morgan Stanley and Wells Fargo have purchased shares in spot bitcoin ETFs this year, according to reports, and the former said it would reevaluate its policies to allow its financial advisors to recommend bitcoin ETFs to its clients. UBS is among authorized participants in the BlackRock Bitcoin Trust (IBIT) , meaning that it oversees the creation and redemption of shares.

Cohen said that these firms would be "looking at their role in the portfolio, and particularly, their utility as portfolio diversifiers."

"What will happen towards the end of this year, and into next year, is we will see allocations made into model portfolios, which would give us much more of a steer as to how investors are using them," she said.

What About BlackRock's Model Portfolio?

BlackRock itself has yet to include crypto ETFs in its own model portfolio, Cohen said. BlackRock's decision in June 2023 to apply for a spot bitcoin ETF based on the price of the world's largest cryptocurrency by market value is widely considered a turning point in spurring the Securities and Exchange Commission to approve them because of the asset management's size. BlackRock has more than $10 trillion in assets under management.

But Cohen doesn't expect to add ETFs based on the ongoing price of cryptos beyond its current IBIT and BlackRock Ethereum Trust (ETHA) . In recent weeks, Giant issuers VanEck and 21Shares have filed applications for ETFs based on the spot price of Solana, the fourth largest cryptocurrency by market cap, according to data provider CoinMarketCap.