Incremental Allocation to bitcoin (BTC)
- Over the last five years, traditional 60/40 equity and bond portfolios which had allocated to bitcoin (BTC) performed well compared to those that didn’t allocate to BTC.
- Despite nearly a three-year bear market from 2018-2020, where the USD value of BTC incurred a maximum drawdown of nearly 74%, diversified portfolios which included BTC performed well compared to those that didn’t allocate on an annualized basis.
- A traditional 60/40 equity and bond portfolio incurred a maximum drawdown of -11.12% over a five-year time period, while a mixed 58.5/38.5/3 equity, bond, and BTC portfolio, as shown in Portfolio 4 below, incurred a maximum drawdown of just -11.96%.
- Incremental allocations to BTC could increase a portfolio’s Sharpe Ratio and may boost its annualized returns.
- Source: 3iQ Corp, Portfolio Visualizer as at January 31, 2022. Data shows 5-year performance of various portfolios. The equities portion of the portfolio is represented by SPDR S&P 500 ETF Trust (SPY). The bonds portion of the portfolio is represented by iShares Core U.S. Aggregate Bond ETF (AGG). The BTC portion of the portfolio is Bitcoin Market Price USD (BTC) commencing January 31, 2017. This is a hypothetical example, for illustrative purposes only. Past performance is not indicative of future results.
- Notes: Portfolios rebalanced annually. Dividends reinvested. Prices expressed in USD.
- *Sharpe Ratio and Max Drawdown as of February 11, 2022.
Leveraging 3iQ’s Bitcoin ETFs as a Canadian Investor
- 3iQ’s bitcoin products can be purchased inside Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs), in addition to other Canadian registered accounts.
- Investors could diversify their type of bitcoin exposure by utilizing funds such as TSX:BTCQ and TSX:QBTC.
- Clients which buy and sell ETFs may only incur trading fees set by brokerage platforms, which are typically more favorable than those from spot cryptocurrency exchanges.
- Buying and selling real BTC through centralized exchanges could involve maker/taker fees, e-transfer fees, wire-transfer fees, and more.