Investors who don’t want to own Bitcoin through a digital wallet or exchange now have a new option: a mutual fund. The Bitcoin Strategy ProFund launched Wednesday as the first open-ended US mutual fund to track Bitcoin prices. ProFund’s minimum investment is $1,000.
The fund invests in first-month forward contracts on the
Chicago Mercantile Exchange.
The idea: convert expiring contracts into new ones for the next month. Suppose Bitcoin’s spot price is $39,750. A first month Bitcoin contract, which expires at the end of August, may cost $39,850. The fund will benefit if it buys the contract and prices rise above $39,850. On anything less, the fund loses money.
One problem: futures are not tax-advantaged and the fund can saddle investors with taxable gains even if Bitcoin prices don’t change. In addition, the spot price may deviate from the futures. “It’s not exactly the same,” said Simeon Hyman, ProShares’ chief investment strategy. While spot and futures prices closely match each other on a daily basis, that doesn’t factor in fees, taxes, or other charges. The prospectus says investors should not expect gains (or losses) to be precisely correlated to Bitcoin prices.
Bitcoin strategy is probably not the only option. Several companies are trying to get a Bitcoin exchange-traded fund approved, although the Securities and Exchange Commission is slow to do so. Grayscale Bitcoin Trust also aims to convert to an ETF. “Bitcoin futures have been trading for a while, but putting them in a mutual fund changes the game for advisors,” said Matthew Hougan, Chief Investment Officer of Bitwise Asset Management. “This is an important milestone.”
Start higher, finish lower
Bitcoin bounced, stocks hit new highs, then sold before the big techs –
– handily beat their numbers. The Federal Reserve met, spoke, called economic “progress” and said a winding down was possible this year. Growth was disappointing, but consumer spending rose.
results suggested that online spending had slowed down. And as usual, the Covid-19 variant was lurking. On the week, the
Dow Jones Industrial Average
decreased by 0.36% to 34,936.13; the
lost 0.37% to 4395.29; and the
decreased by 1.11% to 14672.68.
China reined in its $100 billion private tutoring industry, arguing that the high costs are limiting Beijing’s pressure to convince families to have more children. Officials demanded that the companies operate as non-profits, adhere to compensation standards, and have no foreign ownership. The top Chinese securities regulator then privately told foreign investors that future moves would take market effects into account.
might sell more of his
interest, after having suffered losses in China.
The Senate took several steps toward a trillion-dollar infrastructure bill, despite the lack of a final text and former President Trump naming GOP members who supported it as RINOs — Republicans in Name Only. Senate Majority Leader Charles Schumer said he would vote on infrastructure and a $3.5 trillion budget before the August break. In the House, the Jan. 6 investigation began with testimony from four Capitol and DC Metro police officers. And the Justice Department said Trump’s tax returns can be shared with a House committee.
The federal government told Department of Veterans Affairs employees to get vaccinated. President Biden extended the order, with some restrictions, to federal workers and the military. New York and California took similar steps. The Centers for Disease Control and Prevention even urged those vaccinated in hard-hit areas to wear masks indoors.
IPO priced at $38 a share, valued at $32 billion, almost below expectations. The stock rose briefly, collapsed and then ended 8.2% off its opening price.
Annals of deal making
The merger between
and Willis Tower Watson collapsed after a Justice Department lawsuit. The $30 billion deal would have created the world’s largest insurance broker. Aon pays Willis a billion dollar severance fee; Willis announced a billion-dollar share buyback…Activist investor Cat Rock Capital 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 following the merger of Just East and Takeaway last year… Uber said it would buy logistics management firm Transplace for $2.25 billion from TPG… CBRE buys stake 60% in alternative energy and infrastructure company Turner & Townsend for $1.3 billion.
Write to Daren Fonda at email@example.com