Melanion Capital, the Paris-based investment management company, has just obtained the AMF approval for its first ETF which will track the performance of the Melanion Bitcoin Exposure Index.
The index is the first of its kind due to its unique methodology based on beta weighting which bridges the gap between equities and bitcoin. It tracks a beta-weighted equities basket exhibiting the highest correlation and revenue exposure to bitcoin, which give the index up to 90 per cent correlation to the price of bitcoin.
By tracking this Index, the Melanion BTC Equities Universe UCITS ETF seeks to expose investors to the daily price movements of bitcoin through a diversified wrapper that meets UCITS standards. While there have been many bitcoin-backed ETPs listed in Europe, most European regulators apply a look-through approach rendering them ineligible for most institutional investors, due to their investment restrictions.
“It is therefore a major step for asset managers, allocators and in general for all investors interested in bitcoin, allowing them to have an effective tool to diversify their portfolio in a UCITS compliant format” says Jad Comair, President of Melanion Capital.
It is also a major step for France which once again proves its open-mindedness on cutting-edge subjects and its desire to be a pioneer vis-à-vis other countries in Europe but also in the world, the firm writes, continuing, the SEC for example has still not given its approval to the many bitcoin ETF applications, some dating back as far as 2013.
“Holding our ETF is a better alternative than a straight investment in bitcoin, as it closely tracks its performance in a diversified basket, while eliminating the risks with which it is usually associated, like loss or piracy” comments Cyril Sabbagh, Head of ETF at Melanion Capital. “Indeed, bitcoin’s main concerns for institutional investors are hack, theft, loss, storage, security or crime. By investing in equities replicating the bitcoin performance, investors can achieve diversified asset allocation that was not available before. Given bitcoin’s absence of correlation to traditional assets, and the ETF’s UCITS character, allocators should certainly be interested”.
The Melanion BTC Equities Universe UCITS ETF will initially be listed on Euronext and have management fees of 0.75 per cent.