When people or institutions commit money to a world view is says a great deal more than words ever do. That's because no rational person puts money into something without a reasonable expectation of making a positive return.
Sometimes that return isn't financial (as in philanthropy) but there is always an expectation of personal or financial reward.
Professional fund managers only care about the financial rewards for the investments they are managing. That's how they measure success and it's usually related to their remuneration.
That's why it was interesting to see one of the world's biggest fixed income managers - Guggenheim Partners - open themselves up to investing in Bitcoin.
Their Macro Opportunities Fund has assets of over $USD 5.3 billion across fixed income, debt and equities. They have now amended their investment mandate to seek exposure to Bitcoin. The firm stated:
The Guggenheim Macro Opportunities Fund may seek investment exposure to Bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust
That's a potential investment in Bitcoin of over USD $500 million. talk about putting your money where your mouth is!
As at writing they haven't made that move but the fact that they could is another example of how Bitcoin is becoming a credible institutional investment. To be fair, Guggenheim also made it very clear about the risks of such an investment.
Risk include prices can be highly volatile, regulatory changes, a crisis of confidence in the Bitcoin network, a change in user preference to competing cryptocurrencies, and trading on largely unregulated exchanges that may be more exposed to fraud and failure than regulated, established bourses for other asset classes.
Guggenheim won't be investing directly in Bitcoin but will do so through the Grayscale Bitcoin Trust. This is a listed ETF that is open to any investor with access to US based equities.
Cory Bernardi is the author of seven books and has been a member of the Australian rowing team, a publican, an investment portfolio manager and spent nearly 14 years as an Australian Senator.
