Fund management company Guggenheim Partners has launched a new fund—the Guggenheim Active Allocation Fund—seeking exposure to Bitcoin and other cryptocurrencies, per a filing with the Securities and Exchange Commission (SEC).
According to the SEC filing, the new fund “may seek investment exposure to cryptocurrency (notably, Bitcoin)” via cash-settled derivatives instruments. Bitcoin futures on both the Chicago Mercantile Exchange (CME) and Cboe Global Markets are two examples that offer this precise instrument.
Guggenheim wasted no time in outlining some of the biggest risks facing cryptocurrency investments.
The firm listed a variety of risks that include crypto’s uncertain regulatory environment, the public perception of crypto, cyber risks, and even the “possible cessation or reversal in the adoption and use of cryptocurrency and other digital assets.”
“Cryptocurrency is a new technological innovation with a limited history; it is a highly speculative asset and future regulatory actions or policies may limit, perhaps to a materially adverse extent, the value of the Fund’s indirect investment in cryptocurrency,” the filing added.
They also indicate that “ESG criteria” will be applied to all investments in the fund. The Environmental, Social, and Corporate Governance (ESG) criteria refer to how an investment may impact sustainability goals and broader society.
In November 2020, Guggenheim filed for a similar fund called the “Macro Opportunities Fund.” The $5.3 billion fund would put 10% of its net asset value in Grayscale's Bitcoin product, GBTC.
Guggenheim’s crypto background
Despite the firm’s new crypto fund, CEO Scott Minerd has made some bullish and bearish statements on Bitcoin in the past.
Before Christmas last year, Minerd suggested that Bitcoin’s price could exceed $400,000. In January of this year, he doubled down on that prediction.
“I think one thing that we’re seeing is the sudden interest in retail,” he said, adding, “We’re moving into a speculative frenzy.”
But despite the lofty predictions for Bitcoin’s price, Minerd poured cold water on the flagship cryptocurrency just as it reached lofty all-time highs of over $60,000.
“Things are too frothy,” Minerd said in April this year, simultaneously suggesting that Bitcoin could fall by 50% from its $60,000 heights.
Shortly after, Bitcoin plummeted to $32,000 by May 23. Today, the leading cryptocurrency is trading hands at roughly $37,000