Neuberger Berman, a New York asset management company that oversees $402 billion in private wealth, will invest up to 5% of its $164 million Commodity Strategy Fund in Bitcoin products, like Bitcoin futures and Canadian Bitcoin ETFs.
The 82-year-old firm said in a filing with the Securities and Exchange Commission that its verdict is "effective immediately" and will permit it to invest funds from its commodities fund in Bitcoin, either directly or through a subsidiary, its strategy has been with other futures. Because US-based ETFs do not exist, it uses Canadian Bitcoin ETFs.
What Are Bitcoin Futures? The Bitcoin futures market provides investors with a way to gain exposure to the flagship crypto without holding the underlying cryptocurrency. Investors speculate on the future price of cryptocurrencies using futures contracts similar to those for commodities or stock indexes.
Rather than holding the underlying cryptocurrency, bitcoin futures offer several benefits.
The Commodity Futures Trading Commission regulates the exchange where bitcoin futures contracts are traded, so institutional investors might be more inclined to participate.
Crypto assets have traded outside the scope of regulation for most of their short lives, making asset management institutions wary of it.
In addition, because the futures are cash-settled, there is no need to have a Bitcoin wallet. The transaction does not involve a physical exchange of bitcoin. Bitcoin futures trades, therefore, eliminate the risk associated with holding an asset class that fluctuates greatly in price. Additionally, it can be an expensive affair to keep bitcoin in custody.
A filing dated August 11 was amended in Friday's filing. According to the original filing, the fund was also allowed to invest in Ethereum derivatives, but Friday's Bitcoin-only amendment omits all mention of the leading altcoin asset, Ethereum.
Among the top wealth managers, Neuberger is getting involved in cryptocurrency. Morgan Stanley announced in April this year that several of its funds could invest up to 25% of their total assets in Bitcoin futures and the Grayscale Bitcoin Trust.
A similar announcement came from Goldman Sachs, which announced plans to start trading Ethereum futures alongside Bitcoin futures.
There are already many smaller organizations holding substantial amounts of cryptocurrency. Among 150 family offices surveyed by Goldman Sachs, 15% already own cryptocurrency. Respondents in the US make up 25% of that group.
In spite of Bitcoin's historic bull run cooling off recently, the market is slowly recovering and attracting a new wave of private and institutional investors.