Bitcoin is more of a ‘baseball card than an asset class’: Vanguard

The comments contrast sharply with those of Financial Services Minister Jane Hume, who shocked the market last week by describing cryptocurrencies as an “asset class” and “not a fad”.

Vanguard’s stance also differed notably from competitors such as VanEck – which views cryptocurrencies as a commodity akin to ‘digital gold’ – and is in a race with local fund managers BetaShares and Cosmos Capital to list. the first cryptocurrency-backed ETF on the Australian Securities Exchange. .

When asked if Vanguard Australia is working on developing a similar product, Mr Gopal said: “The answer is definitely no. We want to make sure that any product we launch will be used appropriately, and we don’t think cryptocurrencies play a role in a wallet. “

It has also ruled out including any type of cryptocurrency exposure on its Personal Investor trading platform, which launched in April of last year.

The warning came as Vanguard released the results of a survey of more than 1,000 Australian investors, which found that 14% of the investing population held digital currencies such as bitcoin.

Research has found even higher rates of cryptocurrency ownership among younger investors, with 20% of Millennials and 15% of Gen Z respondents reporting that they hold digital tokens in their wallets, compared to 10% of Generation X investors.

Mr Gopal said the finding was concerning but not surprising, given the media fixation on the price of high-profile cryptocurrencies like bitcoin.

‘Jump on the bandwagon’

“People are jumping on the bandwagon to make a quick buck without realizing the significant risks,” he said. “Retail investors generally look for investments that have recently performed strongly.”

The survey found that most cryptocurrency investors had graduated from other investment classes, with just 3% of respondents indicating their very first investment was in digital currencies, compared to 26% in Australian stocks, 15% in real estate and 12% in a term deposit.

Baby boomers were found to be the most likely to have made their first investment in stocks of national companies (32%), while millennials were more likely to have invested in exchange-traded funds first. 31% of the generation indicating they tried ETFs first, compared to 25% of the general investor population.

Mr Gopal said the conclusion reflected the shift in the balance of power from ASX direct holdings to listed and diversified funds that mimic market performance.

“Investing beyond stocks and ownership of bluechip, which has always been the mainstay of Australian investors outside of the super, has become much more accessible in recent years,” he said.

“Retail investment platforms now provide affordable access to funds and ETFs that place powerful asset allocation approaches that were once the domain of professional investors due to high levels of investment, of course. the reach of everyday Australians. ”

The survey, which focused on the younger generations with more than 60 percent of respondents aged 12 to 40, found that 42 percent of Gen Z members check the performance of their investments on a daily basis, compared with 28. percent of the larger cohort.

Almost half (47%) of respondents have started investing since the start of calendar year 2020, with 22% having opened trading accounts since the start of this year.

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