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Fidelity, UBS and State Street Global Advisors have confirmed that they, like competitors BlackRock and Invesco, are looking to launch products that offer exposure to cryptocurrencies, such as bitcoin.
Assets in European exchange-traded products and mutual funds with exposure to cryptocurrencies amounted to more than € 10.5 billion, according to Morningstar data, which shows the potential attractiveness of these products for asset managers.
XBT, part of CoinShares, is the largest provider in Europe, with assets of € 5.4 billion over eight products domiciled in Sweden and Jersey, followed by the Swiss group 21Shares, which manages € 2.1 billion over its range.
Matteo Andreetto, head of SSGA’s SPDR exchange-traded fund business for Europe, the Middle East and Africa, said: “It is clear that we are looking at space and evaluating the way space is evolving.
“Customers are not only asking about cryptocurrencies, but also specifically SPDR cryptocurrencies. They like the fact that we are a robust, safe pair of hands. ”
Fidelity said it is “close to the evolution of cryptocurrencies [ . . . ] as part of a broader exploration of the potential for digital assets, and the widespread ledger technology behind it ”.
“As you would expect, Fidelity International is exploring the potential of this technology for the benefit of customers,” Fidelity added.
Clemens Reuter, global head of ETFs at UBS Asset Management, said: “[Cryptocurrency is] an area that everyone should look at at the moment. ” However, he added: “Today we have not yet decided to launch anything.”
In May, Invesco told Ignites Europe that it was “investigating” digital asset exposure for ETPs.
Jose Garcia-Zarate, co-director, Passive Strategies at Morningstar, said he expects more cryptocurrency products to be introduced as part of the “gimmick” trend.
“ETFs lend themselves to this kind of exposure,” he added.
However, the asset managers also pointed out the obstacles involved in entering the cryptocurrency space.
Reuter noted that investing in cryptocurrencies has not yet been allowed for Ucits funds.
Andreetto said SSGA would not launch an ETF until the group was “sure” that it could reach the “very high bar” to sit next to its other ETFs and “all the features of [a] SPDR product ”.
“Moving into an ETP would be a departure for us,” he adds.
European ETPs and funds that provide exposure to cryptocurrencies generated an average return of 461.7 percent over the 12 months to end-October. They achieved an annual return of 116.3 percent over three years, Morningstar data shows.
But Garcia-Zarate said investors should be “careful about what they want” with cryptocurrency products.
Investors “need a lot of in-depth due diligence” to understand how cryptocurrencies and related futures markets work, he said.
* Ignites Europe is a news service provided by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.