Explain in detail the global asset management giant BlackRock's entry into the encryption market
On January 20, two fund companies under BlackRock, the world's largest asset management company, submitted investment prospectuses to the US Securities and Exchange Commission (SEC). It is mentioned in the prospectus that some of its funds may participate in bitcoin-based futures contract transactions.
From 2020 to 2021, many investment institutions have indicated that they will buy Bitcoin as part of their asset allocation . In the stereotype, huge asset management giants often wait until the situation becomes clearer before entering the market. However, BlackRock chose to use its two funds with a management scale of tens of billions of dollars as pathfinders and publicly announced its entry into the encryption market.
BlackRock may enter the encryption market
The two fund companies under BlackRock, "BlackRock Global Allocation Fund (BlackRock Global Allocation Fund)" and "BlackRock Funds V", are listed in the investment prospectus (497 Prospectus) submitted to the US Securities and Exchange Commission. Some of its funds can participate in the trading of futures contracts based on Bitcoin.
Source: BlackRock Funds V 497 Prospectus
The investment manual also stated that not all Bitcoin futures contracts can be invested, but Cash-settled bitcoin futures registered with the U.S. Commodity Trading Commission (CFTC). Since the Chicago Board Options Exchange (CBOE) has terminated the bitcoin futures product in June 2019, it means that the only way for "BlackRock Global Allocation Fund" and "BlackRock Funds V" to participate in bitcoin futures contract trading is Chicago exchange (CME).
BlackRock also warned investors in the prospectus that investment in Bitcoin futures may be at risk of insufficient liquidity. Regulatory changes, volatility and valuation risks can also pressure prices, "negatively affecting funds".
Not long ago, BlackRock issued a recruitment request for a regional Vice President of Blockchain Business, responsible for formulating and implementing the company's needs and strategies for blockchain business.
In November 2020, Rick Rieder, chief investment officer of BlackRock’s global fixed income business, said on CNBC that Bitcoin Bitcoin is likely to replace gold because Bitcoin has more functions than gold. The following month, BlackRock CEO Larry Fink said in a panel discussion that Bitcoin was gaining legitimacy as an asset, but whether it would last forever would require multiple markets to verify. Prior to this, Larry Fink had repeatedly expressed his indifference to Bitcoin.
The entry of two BlackRock funds is just the beginning
< p line="Tyi1">BlackRock, founded in 1988, is currently the world's largest asset management company, with assets under management of US$7.81 trillion, far exceeding Japan's GDP of US$4.97 trillion in 2018. BlackRock, Vanguard Group, and State Street Bank were once known as the "Big Three", controlling the entire index fund industry in the United States.
BlackRock serves clients in more than 100 countries around the world and has 70 offices in 30 territories. Its well-known funds include BlackRock Global Asset Allocation Fund, BlackRock World Mining Fund, BlackRock Latin America Fund, BlackRock Emerging Europe Fund, BlackRock World Energy Fund and BlackRock New Energy Fund, etc.
Its well-known fund BlackRock Global Asset Allocation Fund is the fund that announced this time that it can invest in Bitcoin futures contracts One, its return on investment over the past year was 19.72%. The average annual return since its inception is 7.17%, outperforming the benchmark composite index (consisting of the S&P 500, FTSE World Index, Bank of America Merrill Lynch 5-Year U.S. Treasury Index, FTSE Global Government Bond Index) of 6.84%. However, in terms of average annual returns over the past 10 years, the BlackRock Global Asset Allocation Fund has underperformed the benchmark composite index.
< /p>
Currently, the asset management scale of BlackRock Global Asset Allocation Fund is US$15.958 billion, and the main allocation assets are stocks, accounting for 66.11%, followed by fixed income products.
< /p>
According to the information disclosed on the official website, the fund invests no less than 70% of its total assets in securities issued by companies and governments. While financial derivatives are only used for hedging currency risks, the use of financial derivatives in share classes may bring potential risk effects (or spillovers) to other share classes in the fund. This means that once BlackRock invests in Bitcoin futures contract products, it is only to hedge potential currency risks.
However, this does not mean that BlackRock does not attach importance to the encryption industry. In the recent recruitment of the vice president of the blockchain business, BlackRock requires job seekers to be able to explain technologies including cryptographic hash functions, distributed network consensus mechanisms, and public-private-key cryptography, and also needs to design basic valuation methods for encrypted assets. value approach, assessing game theory and decentralized governance models relevant to blockchain technology. At the same time, job seekers also need to understand the key drivers of blockchain network design and their impact on blockchain transaction speed, scalability, privacy, and security.
For this giant asset management company with a management scale of US$7.81 trillion, BlackRock Global Asset Allocation Fund and BlackRock Funds V, two funds whose assets under management account for only a fraction of their total size, are their pathfinders in the encrypted asset industry. As CEO Larry Fink said, Bitcoin can only be called an asset if it has been verified by multiple markets that it can exist forever.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
