April saw the launch of BOLD, a product from 21Shares, based on an index that comprises bitcoin and gold, created by ByteTree Asset Management. Charlie Morris, Founder of ByteTree Asset Management, explains that his firm launched in 2014, as a research project into the blockchain. “We were trying to figure out whether bitcoin was valuable or not, to see whether it was real or a scam,” he says.
Morris, who describes himself as ‘from the real world’ has a back story from the traditional markets as head of multi-assets at HSBC Investment Management. Along with Mark Griffiths, an award-winning coder, they launched an ambitious project to provide real-time, trusted, and comprehensive data on bitcoin and other leading crypto assets.
“The early idea was to build some sort of data business but we have morphed into an asset management business over the last couple of years. I wanted to bridge the gap as I know what is going on in the real world.”
The bridge so far consists of a long only, Cayman Island-structured ‘hedge’ fund, offering long only exposure to the leading crypto products, which has amassed USD4 million, and BOLD, which has USD2.7 million in assets.
BOLD is designed to provide inflation protection, as an alternative to the outdated 60/40 portfolio, Morris says. The combination of the two assets, bitcoin and gold, is designed to offer diversification and returns in difficult markets.
BOLD has launched into a crypto winter and a falling gold price, down 3.5 per cent in July. And, of course, a regulatory issue, with the UK banning retail investment in crypto products.
In dollar terms, BOLD is down 8.8 per cent this year. Morris says that his target audience is the mainstream portfolio manager but: “the products are banned so we are ahead of the market’” he says.
“BOLD is built to be a large product, but we see institutions around Europe and the UK and most institutions still haven’t started buying crypto.” He describes the combination of bitcoin and gold as a natural blend of non-correlating assets.
“BOLD is never strong, never weak, like Swiss equities, giving you diversification benefits,” he says.