BlackRock adds Bitcoin exposure to model portfolio via IBIT

BlackRock incorporated Bitcoin (BTC) into its $150 billion model-portfolio offerings through its iShares Bitcoin Trust ETF (IBIT) exchange-traded fund (ETF), Bloomberg News reported on Feb. 28. 

The asset manager has assigned 1% to 2% of its target allocation portfolios to IBIT.

As of Dec. 17, the fund registered over $36 billion in net flows, amassing more inflows than any ETF launched since 2014.

According to the report, Bitcoin’s inherent volatility prompted BlackRock, in a December report from the BlackRock Investment Institute, to define a 1% to 2% allocation as a “reasonable range.” 

The document noted that exceeding a 2% allocation could disproportionately increase the cryptocurrency’s impact on overall portfolio risk.

Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite, stated:

“We believe Bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios.”

Additionally, Eve Cout, head of portfolio design and solutions for US Wealth at BlackRock, noted that investors want to allocate more to alternatives. Still, they need guidance on the position’s size, scale, and rebalance.

Stance shift amid market turmoil

The decision comes amid IBIT registering $930 million in outflows in the past four days. On Feb. 26, BlackRock’s Bitcoin ETF experienced its largest daily outflow, with $418 million in capital leaving the fund.

Despite the recent woes, IBIT currently holds over $48 billion in assets and displays nearly $40 billion in net flows per data from Bold Report and Farside Investors.

Notably, the firm doubled its Bitcoin exposure in its Global Allocation Fund last year, reporting 430,770 shares of IBIT in its third-quarter 13F Form. The amount was 117% larger than the 198,874 shares reported for the second quarter.

BlackRock’s addition of Bitcoin to its model portfolio is a much-needed positive development that could boost market sentiment amid falling prices.

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