CI launches low-cost bitcoin ETF on TSX

Mar 9th, 2021 | By | Category: Alternatives / Multi-Asset

CI Global Asset Management has become the third Canadian ETF issuer to launch a directly backed bitcoin ETF.

Bitcoin ETFs

CI Global has become the third Canadian ETF issuer to launch a directly backed bitcoin ETF.

The CI Galaxy Bitcoin ETF has listed on the Toronto Stock Exchange (TSX) and comes with a management fee of just 0.40%, considerably cheaper than its competitors.

The fund is available in US dollar (BTCX.U CN) and Canadian dollar (BTCX.C CN) trading lines.

The fund, which is authorized as an alternative fund under local regulations, tracks movement in the world’s largest cryptocurrency based on the daily spot price of the Bloomberg Galaxy Bitcoin Index.

The fund is fully backed by ‘physically’ settled bitcoin, offering investors direct access to the digital asset without the inconvenience, technical challenges and associated risks of self-custody within a digital wallet.

The fund’s bitcoin holdings are stored in a segregated cold storage system and protected in accordance with industry-leading protocols.

It is sub-advised by Galaxy Digital Capital Management, the asset management arm of Galaxy Digital, a financial services firm dedicated to the digital asset and blockchain technology sector. The fund will leverage Galaxy Digital’s cryptocurrency trading capabilities to execute the purchase and sale of bitcoin.

Kurt MacAlpine, CEO of CI Financial, commented: “The CI Galaxy Bitcoin ETF offers investors a secure and convenient means of holding bitcoin in their portfolio. I believe our ETF stands out based on its highly competitive price point and CI and Galaxy’s extensive capabilities and track record in managing alternative investments and digital assets.”

Steve Kurz, Head of Asset Management at Galaxy Digital Capital Management, added: “We believe the emerging digital asset class presents compelling growth and diversification opportunities. The CI Galaxy Bitcoin ETF offers a simple and secure access point for traditional investors to gain exposure to bitcoin.”

Fee war intensifies

The low price tag demonstrates how issuers are willing to slash fees in a bid to capture market share in the nascent digital-asset space. According to prospectus documents, BTCX had originally been slated to launch with a management fee of 1.00%.

Another example is Evolve Funds. It cut the management fee on its Bitcoin ETF (EBIT CN) from 1.00% to 0.75%, just one week after the product launched on TSX, in a move designed to drum up investor interest. EBIT has lagged the Purpose Bitcoin ETF (BTCC.U CN) – the first bitcoin ETF to list on TSX – in terms of net inflows, trading activity, and assets under management despite launching just one day later.

CI will be hoping the lower fee draws investors to its product. But it has another trick up its sleeve. The asset manager has filed with securities regulators to merge its closed-end bitcoin product, the $160m CI Galaxy Bitcoin Fund, into the newly launched ETF. If successful, the move would give the BTCX a significant AUM boost and help to enhance its liquidity profile.

Prospective issuers of bitcoin ETFs will be watching with interest.

Accelerate Financial Technologies and Horizons ETFs have synthetically replicating bitcoin ETFs in the pipeline with Accelerate’s fund penciled in to have a fee of 0.70% and Horizons’ long and short products each provisionally priced at 1.00%.

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