A large licensed asset management company that offers Bitcoin exchange-traded funds (ETFs) to its customers is increasing its customers' interest in crypto assets by diversifying a portion of their assets across asset classes, not just Bitcoin. We suggest that you broaden your horizons.
Fidelity Investments advocates four different ETF products categorized by risk level. The lowest-risk ETFs hold 1% of their assets in cryptocurrencies.
Fidelity Investments advocates conservative crypto allocation
Fidelity Investments now allows everyday investors to gain exposure to the entire crypto market at their own risk choice, ranging from 1% to 3%.
The first choice is the Fidelity All-in-One Conservative ETF/Fund, which has the lowest exposure to cryptocurrencies at 1%. We allocate 40% to stocks, 59% to bonds, and 1% to cryptocurrencies.
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In contrast, the Fidelity All-in-One Balanced ETF fund is 59% tilted towards increasing equity investments, fixed income investments at 39%, and crypto investments at 2%.
The third option, the Fidelity All-in-One Growth ETF, focuses on 82% stocks, 15% bonds, and 3% cryptocurrencies. Meanwhile, the fourth option, the Fidelity All-in-One Stock ETF, is 97% focused primarily on equity investments, with a 3% crypto allocation as well.
What do other asset managers think?
BlackRock also took a bullish stance on digital assets. Its 2022 annual report advised clients to consider exposure to Bitcoin. In its annual report that year, it advised investors to allocate 84.9% to Bitcoin, 9.06% to stocks, and 6.04% to bonds.
Interestingly, this was long before the approval of the Spot Bitcoin ETF (along with 10 other stocks), which was ultimately approved on January 10, 2024.
Joe Burnett of Bitcoin mining company Blockware agreed with the allocation proposal.
“If all investors followed BlackRock’s optimal BTC allocation, the value of Bitcoin would be more than five times the combined value of all stocks, real estate, and bonds.”
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Ark Investments discussed the optimal Bitcoin allocation for 2023 in its 2024 Big Ideas report.
“Our analysis suggests that allocating 19.4% to Bitcoin in 2023 would have maximized the risk-adjusted return of the portfolio.”
Anthony Scaramucci, founder of SkyBridge Capital, also spoke about Bitcoin's potential growth in 2024 as a store of value asset similar to gold. In a recent interview with CNBC, the investor highlighted that gold's market capitalization is $16 trillion.
“I would argue that[Bitcoin]is better than gold because it's easier to move. You need to trade at least half of that. It's now at $1 trillion.”
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