Sygnia has launched South Africa’s first investment vehicle that offers regulated bitcoin exposure. The Sygnia Life Bitcoin Plus Fund launched on 1 June and is “benchmarked against the performance of the iShares Bitcoin Trust [IBIT] ETF [exchange-traded fund].
It says the fund “allows investors to tap into Bitcoin’s price movements, providing an effective way for investors to diversify their portfolio”.
ADVERTISEMENT
CONTINUE READING BELOW
Effectively, the fund will buy that exposure to bitcoin via the US-based ETF.
BlackRock launched the IBIT ETF in 2024 and it “enables investors to get exposure to bitcoin through the convenience of an exchange-traded product, helping remove the operational, tax, and custody complexities of holding bitcoin directly”.
Read: Bitcoin ETFs pull in $9bn as investors ditch gold holdings
BlackRock is the world’s largest asset manager by assets under management ($10.5 trillion, as at March 2024).
Sygnia says the fund “uses derivatives to boost its returns by adding extra income from South African money market investments, compared to holding overnight cash”.
“This helps increase the overall return beyond what the underlying market provides.”
It adds that IBIT attracted over $17 billion in assets under management in its first year, which it says, “represents 1% of all Bitcoin in circulation”.
More profitable than Gold Trust fund
Sygnia notes that the fund has already surpassed BlackRock’s Gold Trust fund ($70 billion versus $45 billion). Some current estimates, based on market value, suggest that IBIT controls around 3.3% of all mined bitcoins.
Technically, the fund is a linked life investment fund available via Sygnia Life policies.
It is available to living annuity investors and investment policy investors. Sygnia has been trying to launch a bitcoin or crypto ETF for years now, but was refused permission by the JSE in 2018 and 2021. On both occasions, it was told that no national policy or regulatory framework exists to guide the listing of such assets.
Sygnia says its Bitcoin Plus Fund offers “a suitable option for investors wanting to allocate a portion of their investment to crypto without having to self-manage the risks of direct investments”.
“This fund is designed to capture bitcoin’s long-term growth potential through a structured portfolio.”
Risk profile: ‘High’
Management fees are 1.2% per annum, with a risk profile labelled as “high risk”.
ADVERTISEMENT:
CONTINUE READING BELOW
Sygnia says given the high-risk nature of crypto, “we recommend that investors do not invest more than 5% of their living annuity or discretionary assets in these funds”.
“The minimum investment term for investors in the fund is five years”.
The fund is obviously not Regulation 28 compliant, nor is it available for retirement funds.
As of June 17, the IBIT ETF had assets of $70.78 billion. Over the past month, it is slightly down in dollar terms, and over both three months and year-to-date it is down around 11.5%. The volatility of bitcoin is illustrated by the ETF’s six-month performance being over 30% in total return and benchmark terms.
On a one-year basis, the fund is up 17%. Since its inception, it is up 89%.
Vast amounts in assets
Given that the ETF is listed in the US and priced in dollars, South African investors, either directly on a platform or indirectly via Sygnia’s new fund, will benefit from any rand weakness over time.
In rand terms, the price of bitcoin is up 54% over one year – a far more generous return, versus the 17% in dollar terms. Over a month, it’s about level in rand or dollar terms.
Over two years, bitcoin is up 284% in rand terms.
Sygnia has R405.6 billion in assets under management as at 31 March, up 19%. It saw net inflows of R43.1 billion in the six months. It says its retail business was a “key growth driver, with retail assets under management increasing to R78.7 billion”.
Read: How bitcoin went from cool to necessary
Follow Moneyweb’s in-depth finance and business news on WhatsApp here.
