Ben Strack

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 <li>The Morgan Stanley Institutional Fund’s Growth Portfolio held 3,642,118 shares of GBTC at the end of Q3</li>
 <li>GBTC had returned 42% in 2021, as of October 29, according to Morningstar data, which is less than half of bitcoin’s 95% return over that span</li>
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Morgan Stanley bought at least millions of additional shares of the <a href="https://grayscale.com/products/grayscale-bitcoin-trust/" target="_blank" rel="noreferrer noopener">Grayscale Bitcoin Trust</a> (GBTC) for a few of its funds during the third quarter, according to regulatory filings.&nbsp;The added GBTC shares are worth over $120 million at today&#8217;s prices.



The <a href="https://www.morganstanley.com/im/en-us/individual-investor/product-and-performance/mutual-funds/us-equity/insight-fund.shareClass.I.html" target="_blank" rel="noreferrer noopener">Morgan Stanley Insight Fund</a> (CPODX) reported having 1,520,549 shares of GBTC, as of September 30, according to <a href="https://www.sec.gov/Archives/edgar/data/1002427/000175272421251482/NPORT_MGCD_93817907_0921.htm" target="_blank" rel="noreferrer noopener">a document</a> filed to the US Securities and Exchange Commission (SEC) on Tuesday. It had 928,051 shares of GBTC, as of June 30, a <a href="https://www.sec.gov/Archives/edgar/data/1002427/000110465921112762/tm2122443d3_ncsrs.htm" target="_blank" rel="noreferrer noopener">separate filing</a> shows.



The Morgan Stanley Institutional Fund’s Growth Portfolio <a href="https://www.sec.gov/Archives/edgar/data/0000836487/000175272421251478/NPORT_MGDJ_97287935_0921.htm" target="_blank" rel="noreferrer noopener">reported</a> holding 3,642,118 shares of GBTC at the end of Q3, compared to 2,130,153 at the end of the prior quarter. The offering’s Global Opportunity Portfolio held 1,463,714 shares of the trust, the filing indicates, up from 919,805 three months before.



A Morgan Stanley spokesperson did not immediately return Blockworks’ request for comment.&nbsp;The company’s increased holdings of GBTC were highlighted by a Twitter account called <a href="https://twitter.com/MacroScope17" target="_blank" rel="noreferrer noopener">MacroScope</a>.



<h3 class="wp-block-heading">GBTC remains a popular BTC investment vehicle</h3>



Morningstar Analyst Bobby Blue said in a recent <a href="https://www.morningstar.com/articles/1068472/article" target="_blank" rel="noreferrer noopener">research note</a> that 47 mutual funds and separately managed accounts held GBTC as of September, which is the most of any crypto investment product. He noted that Ark Invest is one of the largest holders of the trust’s shares, investing about $375 million through its Ark Next Generation Internet ETF (ARKW), as well as in its SMAs and model portfolios.



GBTC, a grantor trust, currently has $36.7 billion assets under management. Its shares have been trading at a discount for much of the year as more bitcoin-related investment products have come to market, Blue explained. The fund’s 2% expense ratio and limitations as a trust have led to substantial differences between the returns of the product and the returns of bitcoin itself, he added.&nbsp;



The offering had returned 42% in 2021, as of October 29, according to Morningstar data, which is less than half of bitcoin’s 95% return over that span.



A spokesperson for Grayscale Investments told Blockworks that an ETF is the most efficient way to resolve any discrepancy between the firm’s products’ share price and the net asset value.&nbsp;



The firm <a href="https://cms.blockworks.co/grayscale-files-to-convert-its-bitcoin-trust-into-an-etf/" target="_blank" rel="noreferrer noopener">filed to convert GBTC to an ETF</a> last month, though the SEC has yet to approve ETFs that invest in bitcoin directly.



“An ETF is what our investors want, and what we believe they deserve,” <a href="https://cms.blockworks.co/grayscales-michael-sonnenshein-a-bitcoin-etf-is-what-investors-deserve/" target="_blank" rel="noreferrer noopener">Grayscale CEO Michael Sonnenshein said</a> in a Twitter post Tuesday.&nbsp;



The regulatory filings were published after Morgan Stanley CEO James Gorman said during the company’s earnings call last month that though the company is not directly trading crypto for its retail clients, it offers exposure to the space through funds.&nbsp;



Gorman added that he does not believe crypto is a fad.



“These things aren’t going away and the blockchain technology supporting it is obviously very real and powerful,” he told analysts on the call. “…But for us, honestly, it’s just not a huge part of the business demand from our clients. That may evolve, and we’ll evolve with it.”



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