BlackRock Adds Its Record-Breaking Bitcoin Fund to Model Portfolios

BlackRock is including iShares Bitcoin Trust (IBIT) in its model portfolio offerings, the asset management giant confirmed to Decrypt on Friday.

The world’s largest asset manager is adding a 1% to 2% IBIT share to its target allotment for Target Allocation with Alternatives and the Target Allocation with Alternatives Tax-Aware portfolios, which are aimed at investors with higher risk tolerance.

“Target Allocation with Alternatives models invest across a full risk spectrum, and allocate to a core allocation of stocks and bonds plus liquid alternative investments,” a BlackRock spokesperson wrote in an email to Decrypt. “The addition of IBIT to these portfolios as a diversifier are in line with the investment objectives of this model, as Target Allocation with Alternatives portfolios are designed for investors with a higher risk budget and growth target.”

The additions affected a small part of BlackRock’s Target Allocation with Alternatives portfolios, the spokesperson said.

Still, the fund could spur fresh demand for the ETF. It also reflects traditional finance’s widening embrace of crypto assets, stemming from markets increased demand for these products. Model portfolios offering prefabricated strategies for financial advisors have been soaring in recent years. BlackRock CEO Larry Fink had been among crypto skeptics in the past, but has since become more upbeat about Bitcoin.

“It’s another step towards bringing Bitcoin into the investment mainstream,” ETF.com Analyst Sumit Roy wrote in a text to Decrypt. “IBIT was already a resounding success—this move could boost demand for the fund further.”

IBIT, which debuted in January 2024 along with nine other Bitcoin-tracking funds (an 11th fund started trading later in the year), reached $60 million assets under management faster than any other ETF in the industry’s 32-year history.

It has shed more than $1 billion in assets over the past seven trading days amid a downturn in crypto markets stemming from market unrest over spikes in inflation and other macroeconomic uncertainties. The fund still holds about three times the assets under management as its largest rivals.

Spot Bitcoin funds collectively have about $90 billion in AUM, even after hemorrhaging more than $2.4 billion worth over the past seven trading days.

Bitcoin was recently trading above $84,000, up about 8% from an overnight low under $79,000, but well off its all-time high of over $108,000 set in mid January. It has fallen 13% during the past month.

ETF.com‘s Roy said that demand for IBIT resulting from the model portfolio changes was unclear. “The actual incremental inflows for IBIT could be… in the millions rather than billions,” Roy said.

In other words, at least in the near-term, this move may be more of symbolic significance than a needle-mover on flows.

Edited by Andrew Hayward