BlackRock funds invest in Bitcoin via its own spot ETF

Two funds managed by BlackRock, the world’s largest asset manager, have invested in the firm’s spot bitcoin ETF, the iShares Bitcoin Trust (IBIT).

The BlackRock Strategic Income Opportunities and BlackRock Strategic Global Bond funds reported purchases of IBIT shares during the first quarter of 2024, according to filings with the U.S. Securities and Exchange Commission.

BlackRock Strategic Income Opportunities acquired nearly $3.6 million worth of IBIT shares, while BlackRock Strategic Global Bond bought $486,000 in IBIT shares.

BlackRock’s spot Bitcoin exchange-traded fund (ETF) has become the world’s largest fund for the flagship cryptocurrency, overtaking Grayscale’s Bitcoin Trust ETF (GBTC).

According to Bloomberg data, IBIT now holds $19.68 billion in Bitcoin, edging out GBTC, which holds $19.65 billion. Fidelity Investments’ Bitcoin fund is the third largest vehicle, managing $11.1 billion in assets.

The rise of IBIT to the top was expected, particularly as GBTC’s Bitcoin holdings halved ahead of the Bitcoin halving event. GBTC’s holdings fell from 619,220 BTC on January 11 to their current level.

Since its launch, the iShares Bitcoin Trust has seen $16.5 billion in inflows, while the Grayscale fund experienced $17.7 billion in withdrawals over the same period. Analysts point to Grayscale’s higher fees and exits by arbitragers as reasons for the massive outflows.

Rick Rieder, BlackRock’s CIO of global fixed income, manages both funds that have invested in IBIT. Filings for the first quarter of this year revealed that hundreds of traditional financial firms acquired shares in spot bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas commented that it was “mind boggling” to see over 400 institutions reporting investments in BlackRock’s new spot bitcoin ETF.

Earlier in March, BlackRock incorporated spot bitcoin ETFs into its Global Allocation Fund (MALOX), which is one of the most preferred vehicles for ordinary and passive investors.

The Global Allocation Fund, established in 1989, seeks to achieve investment returns through a fully managed policy that include U.S. and foreign equity, debt, and money market securities. With assets under management totaling $17.8 billion, MALOX represents a major investment vehicle within BlackRock’s portfolio.

In normal market conditions, the primary fund invests at least 70% of its total assets in the securities of corporate and governmental issuers. Based on its past performance, it delivered a 5-year annualized total return of 10.35% and ranks in the top third among its category peers.

In addition to its focus on Bitcoin, BlackRock has been actively advocating for the approval of a spot Ether ETF with U.S. regulators.