In This Issue:
Fidelity Plans to Launch Bitcoin ETF
Fidelity Investments filed a preliminary registration statement with the SEC last week to launch an exchange-traded fund that tracks the price of Bitcoin. The ETF would be called the Wise Origin Bitcoin Trust, with Fidelity Digital Assets serving as custodian. Share prices would track an index that compiles spot prices from a variety of Bitcoin markets.
If approved, the fund could help usher cryptocurrencies into the financial mainstream. Bitcoin’s eye-popping rally of recent months—it increased in value more than 300% in 2020 and has more than doubled in price so far this year—has gripped investors’ attention. Keeping hold of the currency itself has proven somewhat more difficult for some individuals. Unlike Wall Street, with its decades-old, highly regulated system of custodians, brokerages and clearinghouses, the nascent Bitcoin ecosystem is still emerging from its Wild West phase. Tales abound of early adopters who forgot their password or misplaced a thumb drive containing a digital “wallet” and found themselves unable to access millions of dollars’ worth of the currency.
Fidelity is far from the first investment firm to attempt to bridge the gap and come up with an offering that would allow retail investors to access cryptocurrency with the same ease and confidence as they do a stock or bond fund.
Since 2018, the firm has held the cryptocurrency for professional investors, and offers them access to the Grayscale Bitcoin Trust, a digital currency investment product which is traded over the counter—that is, it is not listed on a formal exchange. These offerings are limited to professional investors, have high fees and generally require high investment minimums (Fidelity’s requires $250,000 per client), keeping them inaccessible to the average investor.
A low-fee, low-cost Bitcoin ETF would be almost certain to change all that. But the SEC has so far been wary of such efforts—rejecting nine Bitcoin ETF applications in 2018. Other countries’ financial regulators have been more receptive, with two Bitcoin ETFs launched in Canada so far this year.
Vanguard Mishandles Funds in Nevada 529
Vanguard Group admitted this month that it made investment errors in some customers’ 529 education savings accounts.
As the investment manager for the $27 billion state of Nevada 529 plan, the Malvern, Pa. fund giant directed more money to stock funds than instructed by some clients of the plan.
The error came about following a shift in the portfolio allocation strategies offered by the plan. Some 529 plans, including Nevada’s, offer an option to automatically reallocate holdings from stocks to bonds as a child nears college age. (We’ve discussed the ins and outs of 529s extensively—check out our three part series to learn more about how they work, different states’ plans and how to find the best 529.)
But 529 plans can also be used to save for private school tuition or other educational costs. So Vanguard decided to switch to basing its reallocation schedule on the child’s planned date of enrollment, rather than their age—reducing portfolio risk as the child starts school whether they’re eight or 18.
After the revamp of the strategies last year, nine of the plan’s 31 portfolios wound up with more equity exposure than the asset manager had intended, according to what Vanguard told customers last week. It has declined to state how much money had to be reallocated as a result of the error or the number of customers affected.
This is far from the first time that systems and operational errors have bedeviled Vanguard, which oversees more than $7.2 trillion in investors’ assets, including $136 billion in 529 plans as of the end of 2020. There have been repeated instances of customers being unable to access their brokerage accounts during periods of heavy trading, stretching back as far as 2018 and as recently as this January. In addition, the firm fessed up last fall to a reporting error in their money market funds that went unnoticed for over a year.
We’ve applauded Vanguard’s penny-pinching ways when it comes to keeping fund fees low—but making sure your customers can access their accounts and creating backup systems to catch errors and prevent fraud are surely worth investing in.
Podcast: Dan Wiener & Jim Lowell—Lessons From a Pandemic Year
In our latest podcast, Chairman Dan Wiener and Chief Investment Officer Jim Lowell take a look back at the stock market’s swift, pandemic-induced crash a year ago—and the lessons they’ve learned as investors during one of the most prolonged stress tests our society has faced. Their wide-ranging discussion covers:
- The herd behavior and investment fads that drove stir-crazy markets
- Whether stocks are currently overvalued
- The Bitcoin rally and what it portends for the future of digital currencies
- If today’s inflation fears are grounded in reality
- How China’s economy is emerging from the pandemic
It’s been a year the likes of which we’ve never seen—click here to listen to Dan and Jim help make sense of it!
Adviser Investments’ Today’s Market Takeaways
There’s no shortage of hyperbolic headlines and provocative punditry in the financial media. But you won’t find such hysterics here. In Today’s Market Takeaways, members of our investment team provide timely videos that clearly and concisely explain what we’re seeing in the markets.
Research Analyst Liz Laprade talked about the reasons behind the abrupt swoon of some tech company stocks last week, while Vice President Steve Johnson discussed some recent green lights for the economy.
We hope you find these episodes engaging and accessible, and please let us know if there are any topics you’d like to hear us address by sending an email to email@example.com!
About Adviser Investments
Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFs, fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trusts, foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the eighth consecutive year, Adviser Investments was named to Barron’s list of “America’s Best Independent Advisors” and its list of the top advisory firms in Massachusetts in 2020. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015, 2016, 2018 and 2019.
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The Barron’s America’s Best Independent Advisers rankings consider factors such as assets under management, revenue produced for the firm, and quality of practice as determined by Barron’s editors. According to Barron’s, “around 4,000” advisory firms were considered for this recognition in 2020; with about 1,200 firms receiving recognition. The award sponsor has not disclosed how many firms were surveyed or considered for this recognition, nor the percentage of total participants that ultimately received recognition. For more information and a complete list of recipients visit https://www.barrons.com/report/top-financial-advisors/1000/2020. Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014.
The Barron’s Top Advisor Rankings by State (Massachusetts) (also referred to as Barron’s Top 1,200 Financial Advisers) considers factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. According to Barron’s, “around 4,000” advisory firms were considered for this award in 2020, with about 1,200 firms receiving recognition. For more information and a complete list of recipients visit https://www.barrons.com/report/top-financial-advisors/1000/2020?mod=article_inline. Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014.
The Financial Times 300 Top Registered Investment Advisers is an independent listing produced annually by the Financial Times and Ignites Research. According to the Financial Times, in 2019, approximately 2000 firms were invited to be considered for its list; 740 responded, with 300 being named to this list. The listing reflects each practice’s performance in six primary areas: Assets under management (70-75% of a firm’s score), asset growth (15% of a firm’s score), years in existence, compliance record, credentials and online accessibility. For more information and a complete list of recipients visit https://www.ft.com/content/44d2b2b2-6cef-11e9-9ff9-8c855179f1c4. Years Received: 2019, 2018, 2016, 2015 & 2014.
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