**BlackRock Embraces Bitcoin in Model Portfolios**
BlackRock, the largest asset manager globally by assets under management, has recently taken a significant step by recommending Bitcoin allocation through its model portfolios. This well-known asset manager has long recognized Bitcoin’s unique qualities, and now it has further solidified its commitment to the pioneering cryptocurrency by incorporating it into its portfolio offerings. On Friday, BlackRock announced the addition of the iShares Bitcoin Trust (IBIT)—the fastest-growing fund in ETF history, which offers alternative exposure to Bitcoin—into its Target Allocation with Alternatives models.
**Understanding Model Portfolios**
To provide some context, a model portfolio is essentially a curated collection of asset allocations designed to align with clients’ risk tolerance and reward objectives. Asset managers frequently adjust these portfolios in response to evolving market conditions and client preferences. On Thursday, BlackRock included IBIT in both the Target Allocation with Alternatives and the Target Allocation with Alternatives Tax-Aware portfolios, allocating 1% to 2% of this Bitcoin-focused product to the model portfolios.
**Insights from BlackRock’s Team**
Michael Gates, the lead portfolio manager for BlackRock’s alternative model portfolio, highlighted several key theses that support Bitcoin’s intrinsic value and long-term investment potential. These include the asset’s scarcity and its historical performance as a hedge against inflation.
**A Game-Changer for Clients**
This addition could offer clients with a higher risk appetite an exciting opportunity for portfolio growth through Bitcoin exposure. Notably, this marks the first time BlackRock has integrated IBIT into any of its model portfolios, a move that is expected to generate increased demand for the ETF.
**The Significance of This Move**
This development comes on the heels of BlackRock’s recent adjustments to its fund allocations. While the models that now include IBIT may be among the lower-end funds in terms of assets under management, the implications for Bitcoin are substantial. Brain Rose, host of London Real, emphasized that this development is more significant than it may appear at first glance. He pointed out that BlackRock’s model portfolios influence “billions” in funds, as large investors often replicate these allocations.
Moreover, this strategic move could inspire other asset managers to follow suit, potentially leading to increased inflows into Bitcoin. It’s worth noting that Robert Mitchnick, BlackRock’s head of digital asset research, has previously stated that the firm aims to attract institutions and wealth managers to embrace Bitcoin. This addition is just one of the ways BlackRock is working to stimulate demand for IBIT.
