Grayscale announced four model portfolios on September 14, offering financial advisors standardized approaches to building crypto exposure for client accounts. The strategies combine multiple exchange-traded products (ETPs) and incorporate asset selection, position sizing, diversification, and quarterly rebalancing.
According to Laurie Katz, Grayscale's global head of distribution, the portfolios aim to reduce operational work for advisors. "Advisors are increasingly looking for ways to bring digital assets into client portfolios without having to build and maintain allocations asset by asset," Katz stated.
Portfolio Structure and Design
Each model uses market-cap weighting, rebalances quarterly, and limits any single asset to 40% of the portfolio. The four strategies include:
- Digital Assets Core Plus: Combines bitcoin and ethereum with selected assets such as solana and chainlink for broad foundational exposure.
- Digital Assets Leaders: Provides exposure to the five largest eligible digital assets held through Grayscale's single-asset ETPs, with composition changing as eligible assets shift in market capitalization.
- Digital Assets Next Gen: Excludes bitcoin and holds up to 10 established or emerging crypto assets.
- Digital Assets Infrastructure: Targets protocols supporting smart contracts, tokenization, and related applications.
Advisor Control and Implementation
Grayscale Advisors LLC will provide the models to financial platforms, which may make them available to advisors. Advisors retain full discretion over allocations, and remain responsible for suitability determinations, trade execution, implementation, and client reporting.
Grayscale does not charge model recipients or their clients a direct advisory fee, though some models may include ETPs sponsored by Grayscale affiliates that collect sponsor fees and certain staking-related charges.
ETP Considerations
Investors using the models would own interests in exchange-traded products rather than holding underlying cryptocurrencies directly. ETP structures introduce sponsor fees, trading costs, tracking differences, custody arrangements, and market-hour limitations that do not apply to direct ownership.
Federal investor guidance describes bitcoin and ether as highly speculative. According to an Investor.gov bulletin published September 9, 2024, spot bitcoin and ether products are exchange-traded commodity trusts, not investment companies registered under the Investment Company Act of 1940.
