Why not list Bitcoin ETF? Vanguard explains: Immature, speculative asset with no intrinsic value
In the late 1990s, Vanguard also avoided internet funds and in 2019 decided to discontinue leveraged funds, inverse funds, and ETFs, and will stop offering most over-the-counter traded stocks in 2022. Janel Jackson, head of the global ETF capital markets, pointed out that in hindsight, Vanguard made the right decisions, benefiting users in the end.
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Why Vanguard Doesn't Have a Bitcoin ETF
Vanguard's decision not to introduce a Bitcoin ETF has sparked discussions, leading the company to provide a detailed explanation on their official website about "Why Vanguard Doesn't Have a Bitcoin ETF".
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Does Vanguard Plan to Launch a Bitcoin ETF?
Janel Jackson, Global Head of ETF Capital Markets, stated:
No, Vanguard typically considers various factors, including whether the asset has long-term investment value and meets customer needs. Although discussions about Bitcoin have increased overall, we currently believe they do not have a suitable role in long-term investment portfolios.
He also emphasized that Vanguard is indeed interested in blockchain technology and actively participates in related research, believing that this will make the capital markets more efficient.
Why Doesn't Vanguard Offer Cryptocurrency-Related Products?
Andrew Kadjeski, Head of Brokerage and Investment Solutions, pointed out that offering cryptocurrency-related products is simple, but Vanguard's structure is designed specifically to meet the needs of investors, most of whom are long-term buy-and-hold investors.
Cryptocurrency – Immature, Lacks Intrinsic Value, a Speculative Asset with No Cash Flow
Janel Jackson referenced an article from Morningstar, stating that even allocating 5% of Bitcoin in a traditional balanced investment portfolio could significantly increase risk, largely due to Bitcoin's extreme volatility.
He said:
To Vanguard, cryptocurrencies resemble speculation rather than investment. Although classified as commodities, they are an immature asset class with almost no history, intrinsic economic value, or cash flow, and could potentially disrupt investment portfolios severely.
Vanguard Has Also Avoided the Dot-Com Bubble and Inverse ETFs
Janel Jackson and Andrew Kadjeski concluded by mentioning that Vanguard also avoided internet funds in the late 1990s, decided to discontinue leveraged funds, inverse funds, and ETFs in 2019, and will stop providing most over-the-counter trading of stocks in 2022.
Vanguard, of course, could leverage these advantages, but they always ask themselves:
Does this meet the long-term needs of investors? In hindsight, in almost all cases, I believe we made the right decisions, ultimately benefiting users.
Janel Jackson emphasized that Vanguard's mission is to provide investors with the best chance of investment success. This is not just a slogan but has been ingrained in their DNA, and not offering a Bitcoin ETF is to stay true to that mission.