First Bitcoin mutual fund marks a milestone

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Illustration by Elias Stein

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Investors who don’t want to own Bitcoin through a wallet or digital exchange now have a new option: a mutual fund. The Bitcoin Strategy ProFund was launched on Wednesday as the first open U.S. mutual fund to track Bitcoin prices. The minimum investment for ProFunds is $ 1,000.

The fund invests in futures contracts on the Chicago Mercantile Exchange. The idea: to renew expired contracts into new ones for the following month. Let’s say the Bitcoin spot price is $ 39,750. A first-month Bitcoin contract, expiring in late August, could cost $ 39,850. The fund benefits if it buys the contract and the prices go above $ 39,850. On anything less, the fund loses money.

One catch: Futures are not tax-efficient, and the fund could impose taxable gains on investors, even if Bitcoin prices don’t move. In addition, the spot price may diverge from futures contracts. It’s not exactly the same, says Simeon Hyman, head of investment strategy at ProShares. While spot and futures prices closely match daily, this does not take into account any fees, taxes, or other costs. The prospectus states that investors should not expect gains (or losses) that correlate precisely with Bitcoin prices.

Bitcoin strategy is unlikely to be the only option. Several companies are trying to get approval for a Bitcoin exchange-traded fund, although the Securities and Exchange Commission is slow on this. Grayscale Bitcoin Trust also aims to convert to ETF. Bitcoin futures have been traded for some time, but placing them in a mutual fund is a game-changer for advisers, says Matthew Hougan, chief investment officer of Bitwise Asset Management. This is an important step.

Last week start higher, end lower

Bitcoin rebounded, stocks hit new highs, and then sold off before big tech Microsoft, Alphabet, and Apple handily beat their numbers. The Federal Reserve met, discussed, cited economic progress and said a cut is possible this year. Growth disappointed, but consumer spending jumped. Amazon.com results suggest online spending has slowed. And, as usual, the Covid-19 variant was in hiding. Over the week, the Dow Jones Industrial Average fell 0.36% to 34,936.13; the S&P 500 lost 0.37% to 4,395.29; and the Nasdaq Composite was down 1.11% to 14,672.68.

Repression continues

China has curbed its $ 100 billion tutoring industry, arguing that its high costs limit pressure from Beijing to convince families to have more children. Officials demanded that businesses operate as nonprofits, meet fee standards, and have no foreign ownership. China’s main securities regulator then privately told foreign investors that market impacts would be factored into future moves. SoftBank Group could sell more of its stake in Uber Technologies, after suffering losses in China.

Rocky path

The Senate has taken several steps forward towards a trillion dollar infrastructure bill, although it has no final text and former President Trump has called GOP members RINOsRepublicans in Name Only. Senate Majority Leader Charles Schumer has said he will hold infrastructure votes and a $ 3.5 trillion budget bill before the August recess. In the House, the Jan. 6 investigation began with the testimony of four police officers from Capitol and DC Metro. And the Justice Department said Trump tax returns could be shared with a House committee.

Extensive vaccination

The federal government has asked workers at the Department of Veterans Affairs to get vaccinated. President Biden expanded the order, with some limitations, to federal workers and the military. New York and California have taken similar steps. The Centers for Disease Control and Prevention has urged even those vaccinated in hard-hit areas to wear masks indoors.

Robinhood stumbles

Online broker Robinhoods IPO priced at $ 38 per share, valued at $ 32 billion, near low expectations. The stock rose briefly, dipped, and then found itself down 8.2% from the opening price.

Annals of negotiation

The merger between Aon and Willis Tower Watson collapsed after a Justice Department lawsuit. The $ 30 billion deal would have created the world’s largest insurance brokerage. Aon pays Willis a billion dollar break-up fee; Willis announces billion dollar share buyback Activist investor Cat Rock Capital has called on Europe’s largest food delivery service, Just Eat Takeaway, to seek a deal to avoid a hostile bid. The reason: The company’s flawed communication policy with investors after Just East and Takeaway merged last year, Uber announced it would buy logistics management company Transplace for $ 2.25 billion from TPGCBRE . $ 1.3 billion.

Write to Daren Fonda at [email protected]

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