“It’s in this context that we’ll show clients what their investment in crypto means within their portfolio as a whole,” Stolnitz said. “We know that many of our clients and target audience want to put some money into cryptocurrencies and we can help them think about it the right way.”
Rival New York-based Betterment with about $29 billion in assets under management is also weighing how to offer crypto—but not anytime soon.
“Crypto is something that we are very excited about as a company, but the plans for incorporating them into Betterment’s platform aren’t on the immediate road-map,” spokesperson Danielle Shechtman said. “Right now, we’re more so exploring how we might offer crypto in a responsible way, within a guided framework. In the event that Betterment does offer crypto as an investment strategy, we’d be focused on it as an asset class to hold as a small part of the overall portfolio.”
There are a couple of small startups that do offer robo-advice within a pure crypto basket, betting in the absence of bitcoin ETF there is customer demand for a managed solution.
One is Seattle-based Makara, co-founded by quantitative cryptocurrency hedge fund manager Jesse Proudman, which launched in June. It promises “crypto investing on autopilot” and claims to be the first such offering registered as an investment advisor with the SEC.
Clients can choose from six baskets, including decentralized finance and a “blue chip” weighted offering of coins with a market value of more than $10 billion. Fees are 1% of assets under management—notably higher than the 0.25% charged by conventional robo-advisors.
“There is significant pent-up demand for the asset class that isn’t satisfied by the existing exchange infrastructure,” Proudman said in an interview. “For the vast majority of market participants, this asset class is just too confusing.”
Makara doesn’t offer standard investments like stocks or bonds or require users to disclose what proportion of their total portfolio is in crypto, leaving overall rebalancing and risk judgment to the individual.
“We do remind people that this is an extremely volatile and speculative investment and should only be a part of their complete investment program,” Proudman said.
—With assistance from Ben Bain, Suzanne Woolley and Annie Massa.
This article was provided by Bloomberg News.