The US-listed exchange traded fund (ETF), WisdomTree Managed Futures Strategy Fund has increased its allocation to Bitcoin (BTC) futures. This is in recognition of the potential for “significant returns” that are not correlated with the wider market.
The allocation was made using regulated bitcoin futures contracts that are traded on the Chicago Mercantile Exchange, which is the same derivative instrument that backs all US bitcoin ETFs.
WisdomTree announced the fund would not invest directly in bitcoin, which is consistent with the position taken in many US financial institutions.
WisdomTree stated that bitcoin futures are attractive due to “the potential for significant absolute return.”
They explained that bitcoin is attractive for more than just its potential returns. Also, there is a need to consider the lack of correlation with other assets.
WisdomTree stated that Bitcoin has been a great diversifier from traditional asset classes in the past.
They stated that their objective was to provide investors with this exposure in an appropriate risk-controlled way via a systematic long/flat trends-following strategy that responds quickly to changing market conditions.
According to the fund’s website, although the initial allocation was only 1.5%, the mandate of the fund allows for up to 5% of its assets, which can include bitcoin futures.
According to MicroStrategy, data from an overview of returns on different assets versus bitcoin shows that 212 of 500 companies in the broad S&P 500 index performed better than bitcoin over a 12-month period as of January 6.
WTMF (exchange-traded funds) is actively managed and follows “a systematic trend following strategy.” It is intended to generate positive total returns in rising and falling markets with the aim of keeping its performance uncorrelated with that of the wider stock market.
WTMF currently holds US Treasury Bills as its top holding. They make up over 42% of its assets. According to the fund’s website, it has increased by 18% in a year, but is almost unchanged for the past 10 years.