BlackRock's Bitcoin ETF Is Outperforming Its S&P 500 FUND
Bitcoin is having such a scorching hot 2025 that BlackRock's (NYSE: BLK) iShares Bitcoin Trust Exchange Traded Fund (NASDAQ: IBIT) is earning more than its vaunted iShares Core S&P 500 ETF (NASDAQ: IVV). According to Bloomberg, the iShares Bitcoin ETF has generated $187.2 million despite only having $52 billion worth of assets under management.
BlackRock's iShares Core S&P 500 ETF has over $600 billion in assets under management and has generated $187.1 million in revenue. The revenue figures are very close but the IBIT is radically out-earning the IVV on a dollar-for-dollar basis. Does this mean it's time to dump the iShares Core S&P 500 ETF and go all in on the crypto fund? Not necessarily.
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It's important to get an apples-to-apples understanding of both funds before making any investment decisions. First off, BlackRock's Bitcoin ETF has a significantly higher fee structure than its S&P 500 ETF. BlackRock's website says the IBIT charges an annual fee of 0.25%, compared to the IVV's 0.03%. That explains why BlackRock earns more revenue from the IBIT than the IVV.
However, that doesn't automatically mean the IBIT is a better investment option for you than the IVV. The answer to that question depends on several variables, such as your investment goals, risk tolerance, and how much capital you have. It's also good to remember that you can diversify your ETF portfolio by investing in the IBIT and the IVV at the same time.
BlackRock established the IBIT to allow traditional investors to make cryptocurrency investments through a traditional broker. The IBIT is a spot fund that uses investor capital to buy bitcoin, which is held in trust. The share price movements up or down are largely based on Bitcoin's spot price. If Bitcoin rises, IBIT share prices increase, and the opposite is true if Bitcoin declines.
Trending: New to crypto? on Coinbase.
The IBIT's share price has grown from $24.71 to $66.16 since its inception. That's roughly 270% appreciation in share value since January 2024, which makes sense considering Bitcoin's value has been surging for most of that time. The IVV was trading at $470.17 in early January 2024, and it's currently trading at $624.99. That's roughly 130% appreciation in share value over the same period.
However, the IVV pays a 1.36% dividend. Its impressive returns can be attributed to the S&P 500's bull run, plus the fact that every stock in the IVV portfolio is from one of the most profitable companies in the U.S. The IVV was trading at roughly $143 at its inception in 2000. That means its shares have appreciated by nearly 440% over the last 25 years.
With that said, it's impossible to deny the IBIT has outperformed the IVV since January 2024. However, the IVV's nearly three-decade-long performance track record and its highly diversified nature play strongly in its favor. Yes, Bitcoin is surging, but it has quite a way to go before it can match the S&P 500's historical performance. It's also volatile and subject to wild swings in value.The VV's performance history and the fact that the iVV offers passive income mean it's an expensive share to buy. You can buy almost 10 IBIT shares for the same price as just one IVV share. However, the IBIT is not nearly as diversified as the S&P 500 because, by design, all IBIT holdings are in Bitcoin.
With that said,there is no limit to how high Bitcoin can go if it continues gaining favor with investors and regulators. You may look back 25 years from now and be amazed you bought IBIT shares for only $67. The bottom line is that IBIT offers retail investors a transparent, convenient way to invest in Bitcoin. If that's still too adventurous for you, the old, reliable IVV might be more to your liking.
Read Next: Accredited investors can —with up to 120% bonus shares—before this Uber-style disruption hits the public markets
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This article BlackRock's Bitcoin ETF Is Outperforming Its S&P 500 FUND originally appeared on Benzinga.com
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