Guggenheim Creating Listed ESG-Friendly Crypto Fund

Guggenheim’s Active Allocation Fund could seek exposure to bitcoin, crypto derivatives, and other digital assets — provided they are ESG friendly.

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key takeaways

  • Filing follows Guggenheim’s Macro Opportunities Fund which filed its intent to hold crypto in late 2020
  • The fund will only invest in assets that meet an Environmental, Social, and Corporate Governance (ESG) criteria according to filings

Despite the beginnings of a bear market for bitcoin, institutional investors haven’t lost interest as Guggenheim Investments filed for a new fund called the Guggenheim Active Allocation Fund which may actively seek out investment in the digital assets space according to SEC filings.

Filings show that the fund, which is expected to be publicly traded under the ticker GUG, “may seek investment exposure to cryptocurrency” via cash-settled derivatives such as what’s traded on the Chicago Mercantile Exchange (CME) and Cboe Global Markets. The filings also noted that the fund may invest in publicly traded securities, other investment funds that hold crypto, as well as income securities both in the US and emerging markets. 

Guggenheim’s chief investment officer Scott Minerd is known for his bullish stance on bitcoin. During an interview with Bloomberg late last year, Minerd predicted that its price could hit $400,000.

“I think one thing that we’re seeing is the sudden interest in retail,” he said during the interview with Bloomberg. “We’re moving into a speculative frenzy.”

This isn’t the first time that Guggenheim has offered a fund with crypto-exposure to clients. In November 2020, the company launched what it calls a “Macro Opportunities Fund” which would allocate 10% of its holdings to bitcoin via investments in Grayscale’s Bitcoin Trust. 

But between now and then a few things have changed: namely the obsession with ESG. While ESG mandates for managed assets is nothing new, Deloitte estimated in 2020 that by 2025 there will be $34.5 trillion in managed assets with an ESG mandate, but the combination of ESG and bitcoin is. 

Driven by Tesla CEO Elon Musk’s counterfactual comments about bitcoin’s carbon footprint, investors are taking a keen interest in the perception of ‘dirty bitcoin’ and, where mandated, dump the asset from their portfolio. 

In an earlier interview with Blockworks, Galaxy Digital’s Sebastian Corrochano said that the narrative of concern over bitcoin’s carbon footprint from an ESG point of view was the prevailing one which took the wind out of bitcoin’s sails earlier this month. 

“If the Darwinian concept of which narrative is most important, Elon Musk’s tweeting which started from last week seems to be the primary culprit,” Corrochano said. “The number of firms that have ESG mandates is nearly 50% of institutional investors and that number has doubled in about 10 years.” 

Corrochano also mentioned that there’s a heightened difficulty in attracting that “next institutional dollar” that goes towards the industry given heightened ESG sensitivities.  

But at the same time, if Guggenheim is looking to invest in ESG-friendly businesses in the crypto space, a plethora has popped up during the last few years particularly in the zero-carbon mining sector. That next institutional dollar might not be so hard to fight for, if it’s directed to the right place.

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