This managed futures fund moved quickly to add Bitcoin futures

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Among the highlights of the exchange-traded fund industry over the past year was the debut of several bitcoin futures ETFs.

These launches are a start on the path to broader bitcoin and crypto options in the ETF space, and one of the advantages of bitcoin futures in the ETF envelope is that the door is open to other funds that , otherwise, would not have exposure to the digital asset. to do just that.

For example, the WisdomTree Managed Futures Strategy (WTMF) recently added bitcoin futures to its portfolio, following the lead of a stable partner, the WisdomTree Enhanced Commodity Strategy Fund (GCC), which has been one the first commodity ETFs to include bitcoin futures.

According to WisdomTree analyst Matthew Aydemir, the addition of Bitcoin futures not only further sets WTMF apart from other managed futures ETFs, but also gives investors exposure to Bitcoin in a risk-aware manner.

While WTMF will not invest directly in the largest digital token, the WisdomTree fund allocated 1.5% of its weight to bitcoin futures in early 2022. WTMF is actively managed, so the allocation could increase or decrease over time, but bitcoin in WTMF makes good sense.

Ultimately, we believe what makes Bitcoin attractive to investors is the potential for large absolute returns, adds Aydemir. However, there are other features of Bitcoin that make it a worthwhile addition to our managed futures product. Specifically, Bitcoin has always been a great way to diversify compared to other traditional asset classes.

Translation: Managed futures are frequently adopted by advisers and asset distributors as a way to stimulate diversification in clients’ portfolios. Bitcoin can accomplish this. The cryptocurrency is negatively correlated with the US Dollar Index and major general bond benchmarks, and it has only slightly positive correlations with the S&P 500 and Bloombeg Commodity Index. This is relevant because some of the other futures contracts found in WTMF are derivatives of benchmarks of national stocks, the dollar, and currencies.

We believe that the low historical correlation between Bitcoin futures and other asset classes bodes well for improving the risk-adjusted return profile of a multi-asset fund like WTMF. We made some significant changes to WTMFin June 2021 with the aim of improving the risk-adjusted return, and it would be interesting to examine the correlation between Bitcoin and the restructured Fund, notes Aydemir.

Mission accomplished, because bitcoin is only modestly correlated with WTMF.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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