BlackRock: Crypto ETFs will be included in "model portfolios" by the end of the year

Author: Martin Young, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

BlackRock ETF Chief Investment Officer said that by the end of 2024, cryptocurrency-backed exchange-traded funds may enter the "model portfolio."

In an interview with Bloomberg on July 29, Samara Cohen, head of ETF and index investment at BlackRock, was asked about the introduction and promotion of cryptocurrency ETFs by large institutions such as Morgan Stanley, Wells Fargo and UBS.

Cohen pointed out that these large securities companies are currently conducting risk analysis, due diligence, and studying the role of Bitcoin and Ethereum in their portfolios.

“What’s going to happen at the end of this year and into next year is that we’re going to see assets allocated into model portfolios, which will give us a better understanding of how investors are using them.”

Model portfolios offered by large full-service brokerage firms typically take a diversified approach to investing, based on transparent strategies that balance risk and return.

They can be thought of as pre-designed investment strategies, like ready-made investment templates or “prescriptions.”

BlackRock expects model portfolios to grow to $10 trillion in the next five years from $4.2 trillion today.

Earlier this month, the asset manager’s global head of iShares and index investing, Salim Ramji, said “it’s going to be huge growth,” adding, “it’s the way more and more fiduciary advisors are doing business, and therefore, it’s the way we’re doing business with them.”

Cohen added that Bitcoin and Ethereum are two very different asset classes with different use cases, but they can be used as “portfolio diversification tools.”

Samara Cohen discusses ETH ETFs. Source: Bloomberg

Speaking of the net outflows of spot Ethereum ETFs since their launch, Cohen said she was not worried because it was a strong launch and they provided an "access point" for investors who want to hold ETH in their portfolios.

She said the outflows from high-priced funds were large and could be related to Grayscale’s ETHE, but also to “proxy vehicles” because:

“Investors do want exposure to ETH, especially if they’re using it in their overall portfolio in an ecosystem that they trust.”

Grayscale’s Ethereum Trust (ETHE) has seen a total of $1.7 billion in outflows since its spot ETF conversion, including the latest $210 million outflow on July 29. However, about 10% of that has gone into its zero-fee Ethereum Mini Trust (ETH).

According to preliminary data from Farside Investors, the Ethereum spot ETF has seen outflows for four consecutive days since its launch on July 23, with only one day of inflows.

Cohen also confirmed that a spot ETF for altcoins like Solana is unlikely to appear in the short term. Robert Mitchnick, head of digital assets at BlackRock, expressed the same view at the Bitcoin 2024 conference, "I don't think we're going to see a long list of cryptocurrency ETFs,"