Copy

Morning All, 

Regardless of the fact you like it, understand it, have an interest in it or not, Bitcoin (BTC) has been one of the best performing asset classes of the past 7 years. During the height of the Bitcoin frenzy in late 2017/2018, Bitcoin was both adored and maligned, misunderstood, and pretty annoying (to me as a traditional equities advisor, there was no real way to trade it, and have confidence in the security). Bitcoin has just broken through the US$19,000 highs of 3 years ago, up 160% year to date, and is making headlines again. Over the weekend - 
 

Bitcoin is “is here to stay,”

Bitcoin to “take the place of gold to a large extent,”
 

 

These comments weren't made by just anybody, they were made by the World's largest fund manager, Blackrock. (BlackRock’s chief investment officer of fixed income Rick Rieder – Interview Here)


With the price of Bitcoin back through US$19,000, this could raise the fear that it will be a repeat of 2017, however, one key difference is the involvement of institutional investors this time around. The highly respected founder and CEO of Ark Invest, Catherine Wood, was interviewed in Barron’s recently and suggested this was a key difference which could potentially drive BTC to US$500,000. (interview Here)
 

If all institutions were to assign a similar mid-single-digit allocation to Bitcoin, the cryptocurrency could rise “to somewhere in the $400,000 to $500,000 range,” Wood said.
 

So if you have an interest, read further, and I will give you both the technical and non-technical reasons to own Bitcoin. And introduce you to the best way I have found to invest in Bitcoin, which is the Bitcoin Wholesale Access Fund (BWAF).

 
 

Technical Reasons to own Bitcoin.

 

  • Better Returns - A 1% allocation to Bitcoin has been shown historically to improve your portfolio returns by +7%. (Simulated 60/40 portfolio with 1% allocation, over 7 years or 1 typical investment cycle - Analysis by BAWF)
     

  • Uncorrelated: Bitcoin has shown to have very little correlation to other investments and thus creates an ideal diversification tool.

  • Inflation: There will only ever be 21 million Bitcoin. So, it’s the world first and only true “HARD” asset. Given the broader macro trend for printing money and inflation, there is a strong argument for a hedge. Stanley Druckenmiller, Paul Tudor Jones, Jack Dorsey (Square, Twitter) and Michael Saylor (Microstrategy) have all invested recently and are highly respected.

Non-Technical Reasons to own Bitcoin.

  • Adoption: The groundswell in the northern hemisphere is huge, we aren’t seeing this occur as rapidly in Australia, but it’s coming. Major institutions, pension funds, family offices and corporations are starting to hold Bitcoin in the portfolios and for treasury management.

  • Trading Systems and Security: In the last few years BTC has come a long way. It now has a functioning derivatives market and large financial institutions will offer full custody services. This enables further adoption.  

     

  • Falling Supply: There is an argument that the supply of BTC will fall as it becomes more mainstream. Longer-term investors are inclined to place their holdings into cold storage, and the pool of tradeable BTC may reduce over time. 


How to Access Bitcoin – (for an Individual or professional investor).
 

I have been looking at a number of ways to get exposure to Bitcoin. Cosmos Capital Management has just launched the Bitcoin Access Wholesale Fund (BAWF). The key thing that the team at Bitcoin Access have done well is their institutional fund manager approach to the space. This is the first ASIC registered BTC wholesale fund I have come across. The BAWF enables you to buy and hold BTC as a long term investor, or if I want to trade in and out of BTC on a day to day basis, once set up, it enables that also. The application process is virtually all online and you can be set up within a day. The security/and custody arrangements provide peace of mind (98% cold storage).

Key features in their product we like are:

 

  • Daily Pricing/liquidity: There is a daily NAV issued each morning, which uses a weighted average price across several exchanges. Ensuring a fair price for the Bitcoin.

  • No entry/exit fees: They are not charging entry or exit fees

  • Low overall fees: 1.5% flat fee. No performance charges.

  • Third-party registry: Automic Share Registry handle the issue and redemptions,

  • Third-party custody: They have an exclusive partnership for Custody with Independent Reserve, Australia’s largest and insured crypto-currency exchange, 98% held in Cold Storage and multi-location backed up. (cold storage means the Bitcoin is held in a vault not connected to the internet or held in an online wallet)

  • Annual AMIT tax statement saves you having to work out the tax position each year

 

I have invested in Cosmos Capital, the manager, some time ago and at the time it was primarily for the BTC mining operations. Due to my relationship with Cosmos, they will offer any clients who are interested, a period of 3 months without management fees.

The BAWF is a wholesale only fund, and can only be accessed by Professional and Sophisticated Investors as defined by the Corporations Act.


If you want to access information on the fund, click below and we will send through the documentation. 

 

SEND BITCOIN ACCESS FUND INFORMATION
Best, 
Tom

Thomas Schoenmaker
Head of Wealth Management
Director


 

The "Bull and Bear" and "Desk Notes" are short commentary pieces by the author and not research or necessarily the views of Wentworth Securities or Wentworth's other advisors and Directors. 

If you think someone else would like to receive the emails, just let me know, and I can invite/add them to the distribution list. Alternatively, if you do not wish to receive the emails, just drop me a line and I will remove you. (There is a subscribe button above and unsubscribe below) 

Nothing in these notes should be viewed as personal financial advice to you, it is not written for you personally, and in no-way considers your personal situation.  Whilst these notes discuss markets, macro and companies, and look to raise ideas and discussions, you should not act on the content of the note without seeking your own professional financial advice. The content is general in nature. As a general rule, you should always consult with a financial advisor prior to making any decision on buying or selling an investment. I am always happy to discuss the content or take feedback. 

Follow us on Twitter
Website
Subscribe to Bull and Bear
Financial Licence & Disclaimer: Wentworth Securities Pty Ltd ("WWS") (ABN: 96 155 409 653) (Australian Financial Services Licence No: 422477), and Wentworth Global Capital Finance Pty Ltd ("WGCF") (ABN: 11 155 410 843), Corporate Authorised Representative of WGS (AFSL: 422 477).  This publication is intended solely for information purposes of WWS’s Wholesale, Sophisticated and Professional Investors (as defined by the Corporations Act 2001 (Cth) or the equivalent in each respective Jurisdiction. This communication is not an offer, invitation, solicitation, advice or recommendation with respect to the subscription for, purchase or sale of, any security, and neither this document nor anything in it will form the basis of any contract or commitment. Nothing contained in this document constitutes legal, tax or other advice. WWS, their employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may currently hold interests in the securities referred to in this document. WWS advise that they and persons associated with them may have interest in the above securities and that they may earn brokerage, commissions, fees and other benefits and advantages whether pecuniary or not and whether direct or indirect, in connection with the making of a recommendation or dealing by a client in these securities, and which may reasonably be expected to be capable of having an influence in the making of any recommendation. A reference to this communication includes all attachments.
Copyright © 2020 Wentworth Securities Pty Limited, All rights reserved.


Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

Email Marketing Powered by Mailchimp