Four asset managers have filed applications with U.S. regulators to create ETFs that invest in bitcoin but use derivatives to minimize or completely protect against potential losses.
“Given bitcoin’s meteoric rise this year, many investors may regret missing out because they are concerned about the volatility of cryptocurrencies, and these upcoming downside protection ETFs will allow more people to add bitcoin exposure to their portfolios in a risk-conscious way,” said Todd Rosenbluth, head of research at consulting firm TMX VettaFi.
Specifically, Calamos Investments has applied for four managed floor ETFs.
First Trust Portfolios has applied for a 15% floor ETF as well as a buffer ETF designed to protect against the first 30% of any losses.
Innovator ETFs is applying for a 10% buffer product that will operate over three months. On the other hand, it has also applied for a 20% three-month managed floor ETF with a set “participation rate.”
In addition to this, Grayscale Investments also plans to launch a covered call Bitcoin ETF, which will sell call options on the spot Bitcoin ETF. This will reduce potential price gains if Bitcoin rises, but will provide regular premium income. (FT)
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