Betterment LLC, the largest independent online financial adviser, is launching four thematic crypto investing portfolios for its retail and adviser customers.
The product launch, scheduled for Wednesday, is the latest sign of mainstream acceptance of cryptocurrencies despite a $2 trillion wipeout in the crypto market since last November.
Bank of New York Mellon Corp.
, the country’s oldest bank, said Tuesday that it would begin safeguarding clients’ cryptocurrencies.
“I think the asset class is here to stay,”
Sarah Levy,
chief executive of Betterment, said in an interview. “Crypto represents technological advancement and the technology will continue to improve, but just like stocks there will be winners and losers.”
Last year, the Securities and Exchange Commission started allowing companies to offer futures-based exchange-traded funds that track bitcoin. But the SEC so far hasn’t allowed any ETFs that hold bitcoin or other cryptocurrencies directly, which means some financial advisers are finding creative ways to give clients direct access to baskets of cryptocurrencies.
Betterment, with $33 billion in assets under management, is partnering with crypto exchange Gemini to offer four portfolios populated with tokens listed on Gemini. Each portfolio will track a basket of cryptocurrencies corresponding to a specific theme, including the metaverse and decentralized finance. Gemini will also serve as custodian for the digital assets.
The portfolios will hold crypto directly in managed investment accounts. Those are vehicles that will allow investors to buy into an account overseen by a Betterment algorithm. ETFs, on the other hand, trade on exchanges just as any other stock.
Money managers
Franklin Templeton
and ARK Investment Management recently partnered with Eaglebrook Advisors to offer crypto separately managed accounts for financial advisers who wish to offer clients direct exposure to digital tokens.
Betterment will charge a 1% annual fee for crypto assets. For traditional portfolios, the company charges 0.25% for its digital investing plan and 0.4% for customers who want access to human financial advisers. The crypto portfolios are an optional add-on for Betterment’s retail and financial adviser customers. They are inaccessible to the company’s 401(k) clients.
Betterment said it works with over 2,000 financial advisers from more than 600 wealth-management firms.
In February, Betterment made its foray into crypto by acquiring digital asset robo-adviser Makara, which had about $13 million in assets under management at the end of 2021, according to a regulatory filing.
Since then, a steep decline in token prices and the failures of several once high-flying crypto startups have dampened retail enthusiasm for the asset class. Institutional adoption of major digital assets, often viewed as the fuel to supercharge crypto’s rise, also slowed.
Betterment’s crypto offering will draw from its diversified, long-term and automated approach to investing in traditional assets, Ms. Levy said.
The company will recommend that customers invest no more than 5% of their total investible assets in crypto and it will offer educational materials about crypto, according to Ms. Levy.
SHARE YOUR THOUGHTS
Would you experiment with a Betterment crypto portfolio? Why or why not? Join the conversation below.
She said the company is “thrilled about the timing” of the launch in part because it harks back to Betterment being founded in the depths of the 2008 global financial crisis.
“There’s really an opportunity here to get what we call the crypto curious into the asset class while it is having a low moment,” Ms. Levy said, though she added, “We would never suggest that anyone time the market.”
Betterment, which has over 730,000 customers across all of its business lines, was valued at $1.3 billion at its last funding round in September 2021.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
