Vanguard Slams Bitcoin—But Now Has Billions Tied To It Thanks To Index Exposure
In a twist of fate, Vanguard has become the largest shareholder of the most established Bitcoin equity play.
The $10 trillion asset manager has famously refused to touch Bitcoin and other cryptocurrencies while its peers have jumped headfirst in the past year.
Now Vanguard is the largest shareholder in MicroStrategy (NASDAQ:MSTR), a firm whose value proposition is that it is the most established Bitcoin proxy in the stock market, Bloomberg reported on Monday.
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Vanguard owns more than 20 million shares of all of MicroStrategy's outstanding class A shares, worth over $9 billion, the report said. Bloomberg said that the firm likely surpassed Capital Group in Q4 2024 to claim the top spot among the firm's shareholders. In comparison, MicroStrategy Chair Michael Saylor owns just under 20 million shares, according to an April company filing.
The disconnect between Vanguard's professed cryptocurrency stance and its financial holdings primarily comes from its passive index fund strategies through funds like the Vanguard Total Stock Market Index (NASDAQ:VITSX), Vanguard Extended Market Index (NASDAQ:VIEIX) and the Vanguard Growth Index Fund ETF (NYSE:VUG).
But Vanguard also has exposure to MicroStrategy in some of its actively managed funds. Still, the firm maintains that this is not the result of conviction but the fact that those funds are comprised of stocks chosen by mathematical models.
Trending: New to crypto? on Coinbase.
'God has a sense of humor,' Bloomberg Senior ETF analyst Eric Balchunas told Bloomberg. 'Vanguard chose this life. When you have an index fund, you have to own all the stocks, for better or worse, and that includes stocks that you may not like or approve of personally.'
NovaDius Wealth Management President Nate Geraci said Tuesday on X, 'if you don't see the irony here, I don't know what to tell you.'
Meanwhile, VanEck Head of Digital Assets Research Matthew Sigel said, 'Indexing into $9B of what you openly mock isn't strategy. It's institutional dementia.'
The views come as Vanguard now already offers its customers indirect cryptocurrency exposure through its funds, but refuses to offer customers access to products like Bitcoin ETFs on its brokerage platform."What Vanguard is missing (*huge* miss IMO)... Is there are tons of investors who love Vanguard's low cost approach to stock & bond investing AND they want to own some btc & crypto,' Geraci said. 'Vanguard is essentially making a *market call* on btc/crypto. And alienating a lot of investors.'
While Vanguard struggles to fight off the cryptocurrency wave, competitors like BlackRock (NYSE:BLK) and Fidelity are divvying market share amid significant demand. For example, BlackRock's iShares Bitcoin Trust ETF (NASDAQ:IBIT) has become the fastest ETF to hit $80 billion in assets under management. Also, IBIT now generates more revenue for BlackRock than its product tracking the S&P 500.
Vanguard's inability to avoid offering cryptocurrency exposure to customers despite its views on the asset class highlights how intertwined the asset class now is with traditional finance. Depending on who you ask, that can be a sign of progress or a looming financial disaster.
Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's , starting today.
Image: Shutterstock
This article Vanguard Slams Bitcoin—But Now Has Billions Tied To It Thanks To Index Exposure originally appeared on Benzinga.com
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