Valkyrie to Liquidate Bitcoin Balance Sheet ETF following Low Customer Demand

Valkyrie Funds LLC, a digital asset ETF issuer in the US, announced Tuesday that it would liquidate one of its exchange-traded funds (ETFs) that invests in innovative public companies with exposure to Bitcoin.

The digital assets manager said it would shut down the Valkyrie Balance Sheet Opportunities FUND (Nasdaq: VBB) at the end of this month and then be delisted from Nasdaq, where it has traded since December 2021.

Any investor who holds shares of the fund at liquidation will get a cash redemption equal to the net asset value (NAV) of their claims, according to a filing with the Securities and Exchange Commission on Tuesday.

Valkyrie termed the fund’s dissolution as the best course of action, stating that the move was part of an ongoing review of products to ensure the company best meets customer demands.

The firm said the action was taken after thoroughly consulting the company’s Board of Directors. They determined that discontinuing the fund was the best course of action for all those involved.

Customers never showed much interest in Valkyrie’s second ETF, where the largest positions are MicroStrategy (MSTR) and Tesla (TSLA), firms known for holding Bitcoin on their balance sheets. According to the report, net assets under the fund’s management are only about $570,000 as of now.

Investors may trade shares up until the end of the trading day on October 28. Valkyrie said it would satisfy expenses related to the liquidation, the distribution of cash proceeds, and brokerage expenses.

Last December, Valkyrie Balance Sheet Opportunities ETF aimed to invest primarily in companies that invest in, transact in, or have exposure to the Bitcoin asset class on their balance sheets or those that operate within the Bitcoin ecosystem. The fund is the second in a family of Valkyrie’s ETFs designed to enable investors to participate in the digital asset landscape.

The fund’s discontinuation happens when many investors are still interested in Bitcoin investments despite the market downturn. According to a recent survey, more than 80% of financial advisers in the US are being asked about cryptocurrencies, but many struggles to allocate clients effectively to this asset class. With many publicly traded companies in the US already holding Bitcoin and more corporations, entities, and countries increasingly entering the space, investing in these companies provides indirect exposure that many individuals are seeking.

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Valkyrie Funds Introduces Crypto SMAs for Fund Managers & Advisors

Valkyrie Funds, an alternative asset management firm based in the US, announced on Tuesday the launch of a new Valkyrie Risk Managed Separately Managed Account (VSMA) platform that aims to enable financial advisors, fund managers, and other financial services providers to offer digital asset investments to their clients.

Valkyrie SMA is targeting financial advisors, family offices, and other financial institutions in hopes that it will help these financial pros manage digital assets on behalf of clients or pitch these products to their customers.

Valkyrie SMAs will initially support three active strategies such as a strategy focused on Bitcoin (BTC) alone, another strategy dedicated to investing in Bitcoin (BTC) and Ether (ETH), and another strategy focused on a more diversified option (Bitcoin (BTC), Ether (ETH), Solana (SOL), Polygon (MATIC), and Polkadot (DOT).

Valkyrie Funds Managing Director John Key commented about the development: “The SMAs will rely on Valkyrie’s research to rebalance positions for downside protection and upside exposure.”

SMA is a form of financial wrapper that allows pools of assets to be structured and sold as a single security. In this case, cryptocurrencies are wrapped into an SMA.

Unlike exchange-traded funds (ETFs) and mutual funds, where investors own shares of the fund instead of the underlying securities, the securities in an SMA are owned directly by the investor. SMAs offer customization not available with ETFs and mutual funds and thus can more closely reflect an investor’s risk tolerance, objectives, and other needs. Crypto assets held in an SMA are placed with a qualified custodian.

In Valkyrie’s case, while its SMAs’ Bitcoin and BTC/ETH accounts seek to maintain at least 50% of the portfolio in those assets, the diversified SMA aims for a minimum position of 40% in digital assets, with the remaining assets parked in cash. The three accounts each have minimum investments of $25,000 and carry a management fee of 150 basis points. Gemini is the custodian for the SMAs.

The Valkyrie SMAs will allow these financial providers to design and administer personalized crypto trading strategies for clients and manage them from a single platform.

Valkyrie is now the latest asset management firm to announce crypto SMA plans after, likes Coinbase, Ark Invest, Bitwise, and Franklin Templeton, launched their separately managed account offerings this year.

In a recent survey, almost half of all financial advisors (45%) revealed that they intend to offer crypto assets in response to client demand. Besides that, 80% of advisors disclosed being asked about digital assets by clients of all ages, but only 14% are using or recommending digital assets.

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Bitcoin (BTC) $ 39,734.65 2.50%
Ethereum (ETH) $ 2,162.27 2.92%
Litecoin (LTC) $ 71.81 0.28%
Bitcoin Cash (BCH) $ 227.72 1.01%