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Fund Spy

Bitcoin Could Spread to More Fixed-Income Funds

It’s most likely to appear in more-aggressive strategies, so mind your manager’s approach.

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Bitcoin has established a beachhead in traditional mutual fund portfolios. It’s small and likely to remain so for a while because it’s volatile, not like any other asset class. Even the cryptocurrency pioneers are tiptoeing into it, and not always just to capture its wild, eye-catching gains. Bitcoin’s off-the-charts volatility, covered in this article by Morningstar portfolio strategist Amy Arnott, makes it more likely to appear as a small part of some equity or alternatives funds. It’s unlikely to spread widely in fixed-income strategies: The data from Arnott’s piece notes that bitcoin has been 24 times as volatile as the Bloomberg Barclays U.S. Aggregate Bond Index over the past three years.

Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.