BlackRock, the world’s largest asset manager, has added its iShares Bitcoin Trust ETF (IBIT) to some of its model portfolios. The firm is including a 1% to 2% allocation to IBIT in portfolios that allow for alternative investments. Model portfolios are a mix of investments put together by financial advisors to reach specific investment goals.
Michael Gates, the lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite, said BlackRock believes Bitcoin has long-term investment potential. He also said it can provide unique diversification to portfolios. In January, BlackRock CEO Larry Fink said sovereign wealth funds might drive the price of Bitcoin higher.
He explained they could use it as a hedge against inflation, political instability, or economic instability. Fink said this could result in a 2% to 5% allocation to Bitcoin in investment portfolios. IBIT is currently the largest Bitcoin ETF, managing $47.89 billion in assets.
BlackRock adds IBIT to portfolios
This followed the U.S. Securities and Exchange Commission’s (SEC) approval of the first spot market Bitcoin ETFs in January 2024. The SEC also approved Ethereum ETFs for trading in July.
The inclusion of IBIT in BlackRock’s model portfolios was part of several changes. Cooling earnings expectations led the firm’s model-portfolio team to trim its overweight to equities from 4% to 3%. Within fixed-income, BlackRock is reducing its long-duration exposure.
Among the notable flows on Thursday, there was a record $2.3 billion influx into the iShares 10-20 Year Treasury Bond ETF (TLH). There was also a $1.8 billion outflow from the iShares 20+ Year Treasury Bond ETF (TLT). Gates wrote, “Our conviction is still in stocks over bonds, US over international, growth over value, and tech over the rest of the market.
But the magnitude of each of those directional views is something we look to reduce.”
