Valkyrie Funds, an alternative asset management firm based in the US, announced on Tuesday the launch of a new Valkyrie Risk Managed Separately Managed Account (VSMA) platform that aims to enable financial advisors, fund managers, and other financial services providers to offer digital asset investments to their clients.
Valkyrie SMA is targeting financial advisors, family offices, and other financial institutions in hopes that it will help these financial pros manage digital assets on behalf of clients or pitch these products to their customers.
Valkyrie SMAs will initially support three active strategies such as a strategy focused on Bitcoin (BTC) alone, another strategy dedicated to investing in Bitcoin (BTC) and Ether (ETH), and another strategy focused on a more diversified option (Bitcoin (BTC), Ether (ETH), Solana (SOL), Polygon (MATIC), and Polkadot (DOT).
Valkyrie Funds Managing Director John Key commented about the development: “The SMAs will rely on Valkyrie’s research to rebalance positions for downside protection and upside exposure.”
SMA is a form of financial wrapper that allows pools of assets to be structured and sold as a single security. In this case, cryptocurrencies are wrapped into an SMA.
Unlike exchange-traded funds (ETFs) and mutual funds, where investors own shares of the fund instead of the underlying securities, the securities in an SMA are owned directly by the investor. SMAs offer customization not available with ETFs and mutual funds and thus can more closely reflect an investor’s risk tolerance, objectives, and other needs. Crypto assets held in an SMA are placed with a qualified custodian.
In Valkyrie’s case, while its SMAs’ Bitcoin and BTC/ETH accounts seek to maintain at least 50% of the portfolio in those assets, the diversified SMA aims for a minimum position of 40% in digital assets, with the remaining assets parked in cash. The three accounts each have minimum investments of $25,000 and carry a management fee of 150 basis points. Gemini is the custodian for the SMAs.
The Valkyrie SMAs will allow these financial providers to design and administer personalized crypto trading strategies for clients and manage them from a single platform.
Valkyrie is now the latest asset management firm to announce crypto SMA plans after, likes Coinbase, Ark Invest, Bitwise, and Franklin Templeton, launched their separately managed account offerings this year.
In a recent survey, almost half of all financial advisors (45%) revealed that they intend to offer crypto assets in response to client demand. Besides that, 80% of advisors disclosed being asked about digital assets by clients of all ages, but only 14% are using or recommending digital assets.
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