Vault Wallet Media Division

Created Jan 9th 2023

• Morgan Stanley Has Just Disclosed That It Holds Bitcoin

With a total of $6.5 trillion worth of assets under its management, Morgan Stanley happens to be one of the biggest investment banks out there, and on behalf of its fund clients, it has now disclosed that it currently holds Bitcoin (BTC), the cryptocurrency that has the largest market capitalization.
According to a recent filing, Morgan Stanley's Europe Opportunity Fund bought GBTC for exactly $3.6 million. GBTC, otherwise known as Grayscale Bitcoin Trust, holds actual spot bitcoin.
In part, the filing states, "The Fund may, consistent with its principal investment strategies, invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund... "The subsidiary may invest in bitcoin indirectly through cash-settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin."
This fund mostly consists of Swiss, Dutch, British, Italian, and French equity. In addition, it aims to "maximize capital appreciation by investing primarily in high-quality established and emerging companies located in Europe that the investment team believes are undervalued at the time of purchase."
With the European Opportunity Fund stated as holding assets worth a total of $1 billion, GBTC, which is US-based, has thus been added as a diversifier. However, this specific one has around $120 million worth of assets. Consequently, Morgan Stanley has allotted 3% of those assets to bitcoin; though, those GBTC shares have a value of $1 million now, which means that at this moment, it is 1%.
According to certain academic studies, a portfolio can have at least 1% of it allocated to bitcoin, providing a means for gaining higher risk-adjusted returns. This is exactly what Morgan Stanley seems to have conducted, with Blackrock recently integrating bitcoin within their Global Allocation Fund as well. Such funds can be ideal for investors who are passive and desire exposure to assets that are diverse in nature.
It can be among the biggest markets out there, if not the largest, for such assets, as investors usually hold funds and a few individual stocks. And, until recently, Bitcoin was excluded from this market, with a few still holding out. However, this new asset class is beginning to make a mark on managed funds. Also, the infrastructure needed for such funds to incorporate bitcoin was nonexistent at one point. However, since 2018, hedge funds, market makers, and investment managers have started to tap into the market for bitcoin. Numerous bitcoin-spot ETFs have been added in European and Canadian markets, which has quietly changed the game. That said, while the European and Canadian markets can be easily accessed, the same cannot exactly be said for the US market, which is the reason why Morgan Stanley chose GBTC.

• Final Thoughts

One of the developing themes that can be gathered from all this is the adoption of bitcoin by investment managers, those who are responsible for deciding where the public's investments are allocated. And, since the inception of equities all the way back in the 1600s, they have acquired a new class of assets that they can incorporate within their services or systems.

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