Neuberger Berman Begins Offering Exposure to Crypto
Firm’s commodity strategy now allowed to invest in bitcoin futures, trusts and ETFs
George Walker, CEO of Neuberger Berman
- Cryptocurrencies’ low correlation to traditional asset classes, including physical commodities, can enhance portfolio’s diversification, firm spokesperson says
- Disclosure comes as more asset managers plan to invest in bitcoin futures contracts to offer clients indirect exposure to space
Neuberger Berman, a fund group that manages about $430 billion in assets, is seeking to offer clients exposure to bitcoin and other cryptocurrencies without directly holding the assets.
The Neuberger Berman Commodity Strategy Fund (NRBIX) has begun allowing actively managed exposure to cryptocurrency investments and digital assets through crypto derivatives, such as bitcoin futures and ether futures, as well as investments in bitcoin trusts and ETFs to gain indirect exposure to bitcoin, according to an Aug. 11 SEC filing.
“This trend seems to be accelerating and we expect that an increasing number of managers will extend their mandate to encompass digital assets,” Said Matt Heater, vice president of business development and investor relations at crypto hedge fund Strix Leviathan. “To us, Bitcoin and Ethereum are digital commodities that will power a new digital world. They cannot be ignored.”
The fund, which currently has $161 million in assets, launched in 2012. Its Class I shares carry an expense ratio of 75 basis points, according to Morningstar, and the offering has returned about 44% in the trailing year.
The futures-based portfolio comprises 28 commodities across six sectors, according to a second quarter fund fact sheet on Neuberger’s website. Its top holdings at the time were gold, at about 8%, as well as corn and heating oil at about 7% each.
“One of the main potential benefits of the fund is to provide a hedge against different types of inflation as well as providing a store of value when expectations increase of fiat currency debasement,” a Neuberger Berman spokesperson told Blockworks. “The fund’s portfolio managers believe that cryptocurrencies and digital assets may provide an effective buffer across all of these dimensions, in addition to the roles played by cyclical commodities and gold.”
The portfolio managers expect that crypto assets’ scarcity, along with the increasing demand for them as a store of value, will ultimately drive their value as an inflation hedge. The fund’s team looks to access these markets through exchange-traded instruments in the coming weeks and months.
“Cryptocurrencies also have a low correlation to traditional asset classes, including physical commodities, which can enhance the diversification breadth of our portfolio,” the spokesperson explained. “To this end, the team believes a modest allocation to cryptocurrencies can be additive to the commodities strategy.”
The move comes as bitcoin futures contracts traded on futures exchanges registered with the Commodity Futures Trading Commission is becoming a more popular way for asset managers to offer clients indirect exposure to the crypto space.
ProFunds recently launched the first publicly available US mutual fund designed to provide investment results that generally correspond to the performance of bitcoin. The offering primarily invests in bitcoin futures contracts, and does not invest directly in bitcoin.
On the ETF side, SEC Chairman Gary Gensler said last week during a virtual forum that he would “look forward” to reviewing the filings of ETFs limited to bitcoin futures traded on the Chicago Mercantile Exchange, or CME.
Just days after Gensler’s comments, Invesco and ProShares revealed plans to launch bitcoin futures-based ETFs that could also invest in Canadian bitcoin ETFs and the Grayscale Bitcoin Trust.