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Grayscale’s High ETF Fee Keeps the Cash Flowing In Even as Investors Withdraw

 Grayscale’s High ETF Fee Keeps the Cash Flowing In Even as Investors Withdraw

Assets under management at Grayscale’s GBTC have slumped 50% due to aggressive outflows since it became an exchange-traded fund.

Even so, Grayscale is making five times the amount BlackRock is from IBIT, CoinDesk calculations show.

That’s down to GBTC’s expense ratio of 1.50%, compared with IBIT’s 0.25%.

Grayscale’s bitcoin (BTC) exchange-traded fund (ETF) is reaping higher income than its rivals even as investors flee the vehicle for lower-cost options.

The Grayscale Bitcoin Trust (GBTC), with almost $14 billion in assets under management (AUM), is earning about $205 million a year, CoinDesk calculations show. The figure is roughly five times larger than at rival BlackRock iShares Bitcoin Trust (IBIT), with $17 billion in AUM, which is raking in just $42.5 million.

The discrepancy is mainly down to fees, known as the expense ratio. Before the funds opened for trading on Jan. 11, operators jostling for customers started a price war that saw most settling on an expense ratio below 0.40%. GBTC, which existed as a trust before converting to an ETF, stood out, cutting the ratio just half a percentage point to 1.5%.

That compares with 0.20% at Bitwise Bitcoin ETF (BITB), the lowest among the five biggest issuers by assets under management. Ark 21 Shares Bitcoin ETF (ARKB) went to 0.21% while IBIT and Fidelity Wise Origin Bitcoin Fund (FBTC) set it at 0.25%.

Even as investors have withdrawn funds in search of platforms with lower expense ratios, GBTC’s head start means the cash is still flowing in. In January, it had AUM of $29 billion, according to YCharts, a financial analysis platform, and roughly 600,000 bitcoin.

Total Assets Under Management, GBTC (yCharts)

The figure’s shrunk to $13.65 billion, based on multiplying net assets value (NAV) per share of $49.12 by the 278 million shares outstanding. It now holds about 220,000 bitcoin. IBIT, which holds 366,000 bitcoin, has 642 million shares outstanding and a NAV per share value of $35.13, giving AUM of $17 billion.

GBTC vs IBIT (Glassnode)

Neither Grayscale nor BlackRock responded to an email requesting comment that was sent before U.S. business hours.

Edited by Sheldon Reback.

  

James Van Straten

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