Financial services platform Raiz Invest (ASX: RZI) has announced it will offer investors exposure to Bitcoin with the launch of its seventh investment portfolio, Sapphire.
The company, which operates Australia’s leading micro-investing app, said the new portfolio took 18 months to develop and has been specifically designed to “meet growing customer appetite for exposure to the alternative asset class of cryptocurrency”.
Sapphire will have a 5% target allocation to Bitcoin with the remaining 95% of the portfolio comprising US, Australian, European and Asian large-cap stocks, as well as the Australian corporate debt and money markets, all via exchange traded funds.
Raiz chief executive officer George Lucas said while this portfolio offering is “very high risk”, feedback from customers has “clearly shown they have an appetite for an investment strategy that has an exposure to cryptocurrencies”.
“The investment objective of the Sapphire portfolio is to provide exposure to Bitcoin in a managed, risk-adjusted way. The minimum suggested investment timeframe is more than five years,” he said.
According to Raiz, recent international surveys have found financial advisers are showing an increased interest in Bitcoin for their clients’ portfolios, although only a small number of advisers recommend it.
“With governments printing more money globally due to the COVID-19 crisis, cryptocurrencies such as Bitcoin may play a more important role in a client’s portfolio in the future,” the company stated.
“The Sapphire portfolio is another example of Raiz listening to our customers and giving them choice and control over where they invest, especially as we emerge from the COVID-19 pandemic and they want to re-examine their investment options,” Mr Lucas said.
Raiz will trade and store Bitcoin with New York Trust company Gemini, a cryptocurrency exchange and custodian regulated by the New York State Department of Financial Services. According to Raiz, it is considered one of the safest cryptocurrency exchanges and custodians in the world.
The news comes two weeks after Bitcoin’s halving – a predetermined event where block rewards are cut by half, effectively reducing the number of new bitcoins entering circulation.
In the years following the previous two halving events, the price of Bitcoin rose significantly – from US$10 to US$1,000 after the 2012 halving and from US$1,000 to a peak of US$20,000 after the 2016 halving.
Despite global markets falling in light of COVID-19, the price of Bitcoin reached a near six-month high of US$10,000 (A$15,275) in the lead up to this year’s halving, before dropping slightly just before the event.
The price is now starting to rise again, currently up 1.11% at US$9,182.60 (A$14,026.42).
Millenial investors’ attraction to Bitcoin
Mr Lucas said many of Raiz’s investors are Millenials “who have time on their side when adopting investment choice such as the Sapphire portfolio for the long term”.
“A December 2019 report by the US stockbroker Charles Schwab revealed that while stalwart companies ranked amongst the top investment picks for Baby Boomers and Generation Z, Millennials were more inclined to put money into crypto assets,” he said.
He said the group is now the largest income generator by demographic. Millenials are digital natives who are comfortable holding value digitally, as opposed to Baby Boomers’ preference to index style portfolios.
“The other significant factor is wealth transfer – there’s a an estimated $68 trillion that’s going to be passed down from older generations to Millennials over the next 25 years. A portion of that, in our view, will continue to go into digital assets like Bitcoin,” Mr Travers added.