AdvisorShares Applies for a Bitcoin Futures ETF

Maryland-based investment management firm AdvisorShares submitted an application for a Bitcoin futures ETF last Friday. 

According to the filing, the AdvisorShares Managed Bitcoin ETF will be actively managed and invest primarily in Bitcoin futures contracts. The fund will not invest directly in or hold Bitcoin. 

The fund will also invest in fixed income securities, cash and cash equivalent investments, as well as Bitcoin-related assets such as ETPs, non-U.S. ETFs, and private investment trusts with Bitcoin exposure or directly held Bitcoin. 

Morgan Creek Capital Management, a North Carolina-based capital market company, will serve as the fund’s sub-advisor. Morgan Creek will use both internal and external research to inform the fund’s investment strategies. 

The sub-advisor will seek to determine the anticipated fluctuation of Bitcoin values and “tactically allocate the fund’s assets,” including solely investing the fund’s assets in collateral if Bitcoin’s value is expected to fall. 

The fund will, however, primarily invest in Bitcoin Futures contracts traded on the Chicago Mercantile Exchange (CME) via a wholly owned Cayman Islands Subsidiary. 

When futures contracts approach expiration, they can be replaced by similar contracts or “roll.” However, the fund will not roll into futures contracts on a schedule. Instead, it will roll into futures contracts that the sub-advisor believes will generate the greatest roll yield. 

The filing lists Mark Yusko, the CEO and CIO of Morgan Creek Capital Management, as the portfolio manager. 

No management fee or ticker was listed. 

Earlier this month, SEC Chair Gary Gensler indicated that he might prefer Bitcoin ETFs exclusively dealing with Bitcoin futures contracts, resulting in an influx of proposals for futures-based ETFs. 

Currently, over a dozen Bitcoin ETF applications are under review by the SEC. The regulator has yet to approve any cryptocurrency or crypto futures ETFs. 

The price of Bitcoin has continued to rally, topping $50,000 on Monday for the first time since mid-May. 

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