The WisdomTree funds will buy Bitcoin ETFs

WisdomTree is one of the companies that has issued an ETF on Bitcoin in the markets.

Initially, it had launched the ETP WisdomTree Physical Bitcoin (BTCW / WBIT) available on various European exchanges: Euronext in Amsterdam and Paris, SIX in Zurich, XETRA (Deutsche Börse) in Frankfurt and others.

Later on, it also launched the ETF WisdomTree Bitcoin Fund (BTCW) on the Chicago Cboe.

This last one, launched in January, has so far gathered less than 80 million dollars in AUM (about 1,100 BTC), but it must also be said that the Chicago Board of Exchange is a minor exchange in the USA.

Instead, its European ETP has been launched for a few years now, and has reached nearly $600 million in AUM, with over 8,500 BTC.

It is worth noting that among European ETPs on Bitcoin, WisdomTree’s is the fourth largest in terms of AUM, while its US ETF is among the lowest among those listed on American exchanges.

The WisdomTree Company

WisdomTree Investments is a traditional US financial company founded by Jonathan Steinberg in New York in 1985.

It specializes in ETFs and ETPs.

Initially it was a classic asset manager, but starting from 2006 it launched its first ETFs and since then it has become one of the main providers of ETFs in the United States.

His ETFs use many different asset classes and are listed worldwide, including stocks, currencies, and alternative assets.

It has more than 200 employees, manages over 99 billion dollars of assets globally, and is listed on the New York Stock Exchange with the ticker WT.

The news is that it has obtained approval to purchase shares of Bitcoin spot ETFs for two of its funds, respectively worth $206 million and $117 million.

WisdomTree funds that will invest in spot Bitcoin ETFs

The funds that have been authorized to invest in Bitcoin through ETFs are the WisdomTree Enhanced Commodity Strategy Fund (GCC) and the WisdomTree Managed Futures Strategy Fund (WTMF).

The document submitted to the SEC states that starting from April 3, 2024, each fund will be able to indirectly invest in shares of one or more exchange-traded products (ETPs) primarily holding Bitcoin, through its subsidiary WisdomTree.

These are two actively managed funds that provide broad exposure to various sectors.

GCC focuses on commodities, and invests mainly in futures contracts on energy, agriculture, industrial metals, and metals. The fund invests up to 5% of its net assets in bitcoin futures contracts.

WTMF instead aims to achieve positive total returns in both rising and falling markets that are not directly correlated to equity or fixed income returns.

The fund is managed using a rules-based quantitative strategy designed to capture both upward and downward trends, particularly in commodity, currency, stock, and interest rate markets, through long and short positions in futures contracts. This fund can also invest up to 5% of its net assets in bitcoin futures contracts.

In addition to futures on the price of BTC, these funds will now also be able to purchase shares of Bitcoin ETFs with passive replication, such as the WisdomTree Bitcoin Fund.

Active management ETFs

The large family of ETPs (Exchange Traded Products) is made up of different types of products.

First of all, in addition to ETFs (Exchange Traded Funds) there are also ETNs (Exchange Traded Notes), ETCs (Exchange Traded Commodities) and ETIs (Exchange Traded Instruments), as well as CEFs (Closed End Funds).

Inside the ETFs there is another distinction.

Some in fact are simply passive replicators, investing all their capital in a single asset that they hold in their portfolio.

These are also called ETC, and in fact the price trend of their shares replicates that of the underlying asset.

There are also ETCs that replicate the performance of an index, allowing investors to take exposure to the price movements of multiple underlying assets.

Instead, actively managed ETFs, such as GCC and WTMF from WisdomTree, have a manager who invests the assets not only in different assets, but also may change over time.

In other words, passive replication ETFs, such as those on Bitcoin spot, have a fixed basket of assets to invest in. Only the amount of invested capital changes.

Instead, actively managed funds have a variable basket, so not only does the amount of capital invested change over time, but also the composition of the basket itself in the percentages of the various assets in which the fund has invested.

For this reason, GCC and WTMF may decide to add or remove assets such as Bitcoin, or its derivatives, from their portfolio.