Earlier today (September 9), Rick Rieder, a Managing Director at\u00a0BlackRock, the world\u2019s largest asset manager,\u00a0explained during an interview why his firm owns some Bitcoin.<\/p>\n
BlackRock, which was founded in 1988, started with just eight people working in one room. It made its Initial Public Offering on the New York Stock Exchange on 1 October 1999 at $14 a share.In 2006, BlackRock acquired Merrill Lynch Investment Management. Then in 2009, it acquired Barclay\u2019s Global Investors (BGI), \u201cbecoming the world\u2019s largest asset manager, with employees in 24 countries.\u201d As of the end of Q2 2021, BlackRock had roughly $9.5 trillion in assets under management (AUM).<\/p>\n
Rieder is BlackRock\u2019s Chief Investment Officer of Global Fixed Income, Head of the Global Allocation Investment Team in the Multi-Asset Strategies Group, a member of BlackRock\u2019s Global Operating Committee, and Chairman of the firm-wide BlackRock Investment Council.<\/p>\n
Rieder made his comments during an interview with Andrew Ross Sorkin, a co-anchor of CNBC\u2019s \u201cSquawk Box\u201d. <\/p>\n
Here is what Rieder had to say about Bitcoin:<\/p>\n
\u201cYou know, people describe it as a hedge or an alternative. I\u2019m not sure it\u2019s a really great hedge. I mean the correlation to equities or correlations to risk assets. I\u2019m not sure it\u2019s a great hedge when an asset moves 10 to 15% a day. Really hard to hedge big, organic asset pools with that as a hedge. <\/p>\n
\u201cIs it an alternative currency?\u2026 Part of why I own a small piece of Bitcoin is I do think there are more people that are going to enter that fray over time. We have a very moderate position in our portfolio. I like assets that are quite frankly that are volatile, that have upside convexity, and I could see Bitcoin\u2026 go up significantly.<\/p>\n
\u201cBut listen, I think it\u2019s volatile. I don\u2019t think it\u2019s a core asset class. like bonds are, like stocks are, but I think\u2026 to have a bit as more of a speculative tool in a portfolio, yeah, I think there\u2019s some value to that.\u201d<\/p>\n
The most interesting part of the above interview is that this appears to be the first time that BlackRock has revealed that it owns some Bitcoin. Back in November 2020, the BlackRock CIO said that he didn\u2019t own any Bitcoin in any of his portfolios.<\/p>\n
When on November 20, during an interview on CNBC\u2019s Squawk Box,Rieder was asked if he agreed with Jamie Dimon, Chairman and CEO of JPMorgan Chase (who thinks that the U.S. government will try to regulate Bitcoin if its price gets too high), he replied:<\/p>\n
\u201cI think cryptocurrency is here to stay, and I think it is durable\u2026 I think digital currency and the receptivity \u2014 particularly, millennials\u2019 receptivity of technology and cryptocurrency \u2014 is real\u2026 Digital payment systems is real. So, I think Bitcoin is here to stay\u2026 I don\u2019t do a lot of it or actually any of it in my portfolios\u2026<\/p>\n
\u201cBut do I think it\u2019s a durable mechanism that will take the place of gold to a large extent? Yeah, I do because it\u2019s so much more functional than passing a bar of gold around\u2026\u201d<\/p>\n