NEW YORK (Reuters) – The world’s largest digital currency asset manager Grayscale said on Wednesday its assets under management soared to a record $10.4 billion, bolstered by the continued rise in investment inflows as well as the surge in the price of bitcoin.
Bitcoin on Wednesday jumped to $18,483 BTC=BTSP, the highest level since December 2017. It has appreciated about 160% this year and gained 17% in the last three days.
The virtual currency is now close to its all-time peak of just under $20,000 at the height of its retail investor-fueled 2017 bubble.
Grayscale’s assets grew 76% from $5.9 billion at the end of the third quarter. Its bitcoin fund hit nearly $9 billion in assets on Wednesday, up 85% from that in the third quarter.
The investment manager recorded its largest ever inflows of more than $1 billion in the third quarter, according to its quarterly update. Since the beginning of 2020 to the third quarter, investments into Grayscale reached $2.4 billion, more than double the $1.2 billion cumulative inflows into its funds from 2013-2019.
“While we’re only midway through the fourth quarter, I can certainly share that momentum has continued to carry through to the fourth quarter and probably accelerated a bit to what we have seen in Q3,” Michael Sonnenshein, managing director at Grayscale told Reuters in an interview.
The bitcoin fund represents about 80% of the assets it manages.
Sonnenshein said the market for bitcoin has matured and he expects a steady climb in its price, noting a much more two-sided trading space with the development of ancillary services such as derivatives and cryptocurrency lending.
“For a lot of investors, bitcoin has a lot of staying power and it has overcome so many challenges and so many instances when it has been called dead,” Sonnenshein said.
Its next largest fund — the Grayscale Ethereum Trust — posted assets under management of $1.2 billion on Wednesday, up more than 50% from $806 million at the end of the third quarter.
Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio
Swiss Reject Business Liability Measure, Ban on SNB Investments – Bloomberg
Two Swiss votes that had the potential to alter the corporate landscape of a country known for low taxes and light-touch regulation failed.
Nearly 60% of voters on Sunday rejected a measure that would’ve banned the Swiss National Bank from investing in defense companies.
A second measure, the Responsible Business Initiative, was also unsuccessful. It would’ve held multinational corporations responsible for human rights and environmental lapses abroad but failed to get the requisite majority among the country’s cantons, or states.
While activists pushed for the two initiatives in a bid to force businesses and investors to adhere to higher moral standards, Switzerland’s government argued they’d hurt the economy.
Multinational corporations also campaigned against the RBI, saying it would’ve saddled them with additional bureaucracy and had the potential to cause a flood of lawsuits.
“Of course I’m disappointed,” lawmaker Mattea Meyer, who supported the RBI, told broadcaster SRF.
For the SNB, the vote result means it escapes having to offload stocks valued at almost 20 billion francs ($22 billion). The central bank holds the equities as part of its mammoth 870 billion francs in reserves, built up during a decade of currency interventions.
The initiative would also have stopped pension funds from providing both debt and equity financing to companies that derive more than 5% of their revenue from arms sales.
The failure of the RBI paves the way for the adoption of the government’s less stringent counterproposal. It’ll institute new reporting and due-diligence for firms.
Initiatives require 100,000 signatures to make the national ballot in Switzerland. To be successful, they must get a majority of votes, as well as a majority of cantons.
Stefan Brupbacher, director of machine industry group Swissmem, said he was “relieved” that damage to the Swiss economy and employment was averted.
Swiss Ban on SNB Arms Investment Trending Toward 'No,' SRF Says – BNN
(Bloomberg) — Swiss voters appear to be on course to reject a measure that would ban the country’s central bank from investing in defense companies, according to broadcaster SRF.
Results are due later on Sunday. No trend was yet available for an initiative on corporate ethics, the broadcaster said.
The Swiss National Bank holds defense company stocks as part of its mammoth 870 billion francs ($960 billion) in reserves. It’s a passive investor, merely tracking indexes, but anti-war activists argued a ban would send a strong signal about the ethics of weapons financing.
©2020 Bloomberg L.P.
Investment fees you don’t realize you’re paying – Sentinel & Enterprise
When it comes to investing, there are some things you can’t control. However, the one thing all investors can control is how much they pay in fees.
Numerous studies and surveys over the years have consistently demonstrated that when it comes to investment fees, most investors are unaware of two things: how much they are paying, and how they are paying for it.
One of the biggest reasons most investors are unaware how much they are paying is due to the fact that the vast majority of financial advisers and all mutual-fund fees are automatically deducted from their accounts.
Financial adviser fees
One of the most common methods of compensation for fee-only and fee-based advisers is based on the number of assets they have under management. When it comes to being compensated for their services, more than 95% of financial advisers choose to have their management fees automatically deducted from their client’s accounts. The problem with this “out of sight, out of mind” compensation arrangement is that a financial adviser’s fees are reducing the returns of a portfolio you are paying your adviser to grow.
The industry average asset management fee is 1.1%. At Capital Wealth Management, our asset management fee is 0.5%; however, unlike most financial advisers, we never deduct our management fee from our client’s accounts. Every quarter we mail our clients a detailed invoice that allows them to write a check from a separate outside account, earning little to no interest for our asset-management services, thus keeping more money in their account to grow for retirement.
An additional fee that investor’s have is that associated with investing in mutual funds. Every mutual fund has fees and, similar to most financial advisers, all mutual funds automatically deduct their fees from their shareholders’ accounts. The average stock mutual fund has an expense ratio of about 1%. At Capital Wealth Management, approximately 75% of our clients’ assets are invested in index funds, which have an average expense ratio of 0.1%.
Both fees combined
Mutual-fund fees combined with any fees deducted from an account to pay for a financial adviser’s management fee can significantly reduce the rate of return an individual investor can earn over time. The average financial adviser’s fee of 1.1% and mutual-fund fees of 1% combine for a total pf 2.1% in annual fees deducted from an account.
At Capital Wealth Management, the total fees deducted from our clients’ accounts is 0.1%, for a difference of 2%. How much can this 2% difference in fees make?
Say two individuals each have the same starting portfolio value of $500,000, and earn the same average annual return (before fees) of 8% over 10 years. Portfolio A’s financial adviser and mutual-fund fees of 2.1% are automatically deducted from his account. Portfolio B chooses to pay his financial adviser’s feefrom a separate outside account rather than having it deducted from his account. As a result, the only fees deducted from Portfolio B are the mutual-funds fees of 0.1%. The results after 10 years:
Portfolio A’s total fees: $136,657; Portfolio B’s total fees: $7,201.
Portfolio A’s average return after fees: 5.7%; Portfolio B’s average return after fees: 7.8%.
Portfolio A’s ending value: $873,007; Portfolio B’s ending value: $1,068,721.
Portfolio B ends up with $195,714 more than Portfolio A. The $129,456 of savings in fees allows an additional $66,258 of earnings to compound. This additional 22% of savings is due entirely to Portfolio B’s lower fees.
The fact is that high fees reduce investment returns, and it’s important for all investors to understand what investment fees they’re paying, and how they are paying for them.
Martin Krikorian, is president of Capital Wealth Management, a “Fee-Only” registered investment adviser at 9 Billerica Road, Chelmsford. He is the author of the investment books, “10 Chapters to Having a Successful Investment Portfolio” and the “7 Steps to Becoming a Better Investor.” He can be reached at 978-244-9254, Capital Wealth Managements website; www.capitalwealthmngt.com, or via email at, firstname.lastname@example.org.
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