This Mutual Fund Doubles Down on Bitcoin After Being Downgraded for Too Much Crypto Risk

$4.7 billion asset manager Emerald Advisors is the latest one to increase its holdings of Grayscale Bitcoin Trust (GBTC), revealed the filing with the US Securities and Exchange Commission (SEC).

According to the document, Emerald owns 89,600 GBTC shares as of June 30, up from 78,090 shares of GBTC at the end of March, representing an increase of just under 15%.

The firm also owns 114,120 shares of Grayscale Ethereum Trust (ETHE) but didn’t add to these holdings in Q2.

With a 0.04% stake in ETHE, Emerald is the largest mutual fund holder, while the second-biggest overall as Rothschild Investment Cop. owns 0.09% of ETHE, 279,119 shares. When it comes to GBTC, Emerald only has a 0.01% stake in it.

The fund first bought cryptocurrency funds in 2020 and invested in Galaxy Digital Holdings and crypto exchange Voyager.

Interestingly back in April, the mutual fund that invests in banks and financial firms was downgraded by the rating firm Morningstar Inc. for having too much cryptocurrency risk. But instead of reducing this risk, Emerald has now doubled down on it.

This makes sense given that the firm generated a total of more than 90% of returns between October and March, beating a benchmark of financial stocks.

As Bitcoin, Ether and cryptos surged, so did the size of the firm’s bets on them while Emerald’s exposure to regional banks, which it is best known for, fell to one-third of assets in February.

“Since this fund was founded, it seeks growth in the financial service sector—and it hasn’t changed,” said Kenneth Mertz, Emerald Advisers’ investment chief and portfolio manager at the time.

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