ProFunds, the provider of different mutual funds, has launched a Bitcoin Strategy ProFund under the ticker BTCFC available in the U.S. This is the first investment product under this model to tack the BTC’s price performance.
As with other similar investments products, this fund allows clients to gain exposure to Bitcoin without having to hold the underlying asset with a wallet or exchange platform. Thus, they have a “convenient way to incorporate” BTC into their investment portfolios.
According to the firm, the Bitcoin Strategy Fund will invest in derivates, specifically in BTC-based futures contracts, and won’t directly be buying the digital asset. Thus, they have clarified that their fund could show a different performance than the price of BTC in the spot market.
The market for bitcoin futures may be less developed, and potentially less liquid and more volatile, than more established futures markets. Bitcoin futures are subject to margin requirements, collateral requirements and daily limits that may prevent the Fund from achieving its objective.
The CEO of ProFunds Michael L. Sapir claimed that Bitcoin and cryptocurrencies have gain relevance as an important asset class. Their new investment products have been designed to provide institutions and other entities with a tool to access a Bitcoin strategy. He added:
Compared to directly buying bitcoin, which may involve opening a new account with an unregulated party, this ProFund offers investors the opportunity to gain exposure to bitcoin through a form and investment method that tens of millions of investors are familiar with.
In addition to the usual risk for investing in Bitcoin and other cryptocurrencies, the Fund can be closed and re-open under ProFunds “sole disclosure” and without prior notice. Thus, it warns clients to “carefully” consider potential investments.
Investors Hungry For Bitcoin Exposure?
They provide “assurance the Fund will achieve its investment objective”, according to the prospectus filed with the Securities and Exchange Commission (SEC). The fund will trade on the Chicago Mercantile Exchange (CME) and will determine the value of a BTC with the CME CF Bitcoin Reference Rate (BBR).
The fund won’t be limited to these types of products, it may also seek to invest in BTC-based Canadian Exchange Traded Funds (ETFs) in “unusual market conditions”. It could also invest in short-term cash instruments, such as U.S. Treasury Bills, repurchase agreements, and others.
Senior ETF analyst for Bloomberg Intelligence Eric Balchunas noted that the launch of this Bitcoin mutual fund didn’t impact other investment products in the U.S., such as the Grayscale Trust (GBTC). As seen below, the discount on this product “actually shrank”.
Possibly suggesting high demand for these types of investments tools. Additional data provided by Bloomberg Intelligence’s James Seyffart indicates that there are over 15 Bitcoin ETF petitions in the U.S. On par with many “blockchain” ETFs. The pressure for the SEC to provide a response to these petitions continues to build up.
At the time of writing, BTC trades at $39,777 with a 22.9% profit in 7-day chart