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  5. FBTC: For gold, I've always liked your idea of holding the real thing. [Fidelity Advantage Bitcoin ETF]
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Q: For gold, I've always liked your idea of holding the real thing. I therefore followed your advice to have PHYS which I hold as an insurance rather than for trading.

I'm looking to build the same thing in Bitcoin for about 5% of my portfolio. Can you recommend an ETF or fund that is based on holding bitcoin (rather than one that places bets on it).

I'd like to know your opinion on the best one in CAD and in USD. Since I'm holding it for the long term, would it be better to covert to USD and hold it all there?

Please also give your opinion on the 'insurance' strategy and whether you think 5% of each of gold and bitcoin is a suitable amount for this purpose.

Thanks as always.
Asked by Kevin on October 01, 2024
5i Research Answer:

There are many ETFs that hold physical bitcoin and do not trade or use the physical coins. 

In USD, we like IBIT and FBTC. Both have strong liquidity levels and low MERs and are offered through reputable firms, such as Blackrock and Fidelity. 

In CAD, we like BTCC and FBTC (the Canadian version for Fidelity). Although, both have lower liquidity levels than their US peers, and also higher MERs.

For a long-term position in bitcoin, we would prefer the more credible firms, Blackrock and Fidelity, the higher liquidity levels, and lower MERs that the US versions have to offer.  

Gold is much larger, and has a longer history than Bitcoin, and its 'narrative' is more clear and defined than bitcoin's. Bitcoin also has much higher volatility levels than gold, with periodic 60%+ drawdowns every several years on average. But, this is typically associated with much larger gains than gold as well. Overall, we think Bitcoin makes sense as a hedge against rising global liquidity (money printing, monetary debasement, etc.), but it is highly volatile and a much 'newer' asset than gold. Much depends on the individual investor, but if an individual is comfortable with the risk/return profile of bitcoin relative to gold (in that bitcoin can see 60%+ drawdowns), we would be OK with this split for a long-term investor, while having more overall comfortability with the weighting in gold. 

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