Vanguard Group CEO says Bitcoin ETF does not belong in long-term investment portfolio

Vanguard CEO Tim Buckley Buckley said that a Bitcoin ETF would not be appropriate to appear in Vanguard's portfolio, mainly because of its price volatility.

Buckley said Bitcoin needs to “change as an asset class” before investment firms will consider it as a viable option, and the company has no intention of changing its view on spot Bitcoin ETFs unless that happens.

Buckley made the statement in a trailer for the upcoming webcast released on March 15. The full conversation with Chief Investment Officer Greg Davis will be released on March 19.

Too much volatility

Buckley said Vanguard does not plan to change its stance on spot Bitcoin ETFs, primarily because the company does not believe they are suitable for long-term and retirement investment portfolios. He added:

"Something like Bitcoin is so volatile, it's not a store of value, it's not... it's speculative and it's really hard to imagine how it fits into a long-term portfolio."

Vanguard CEO said that Bitcoin prices have fallen along with stock prices recently and that the growth of the flagship cryptocurrency is difficult to predict. These factors make it difficult to include a Bitcoin ETF in a portfolio.

Buckley said the company focuses on investing in asset classes with underlying cash flows, such as stocks or bonds, that are easier to value and model.

Buckley plans to retire before the end of 2024, but his departure is unlikely to change Vanguard's stance because those beliefs are part of the company's investment philosophy.

Vanguard past complaints

Vanguard previously confirmed that it would not offer a spot Bitcoin ETF shortly after the fund was approved in January 2024. The company elaborated on its concerns in more detail later that month, saying Bitcoin was an “immature asset class.”

Janel Jackson, head of global ETF capital markets and broker and index relations at Vanguard, highlighted the potential for cryptocurrencies to wreak havoc in portfolios due to their short history and lack of intrinsic value and cash flow.

Meanwhile, Andrew Kadjeski, head of the company's brokerage and investments division, explained that the company aims to serve long-term buy-and-hold investors.

The company's history of avoiding short-term market trends, including dot-com funds in the 1990s, eliminating market access for leveraged and inverse funds and ETFs in 2019, and eliminating OTC stocks in 2022 illustrates its priority for long-term stability. A historical strategy that focuses on performance rather than short-term gains.

Vanguard's stance has sparked significant discussion in the investment community, with some clients expressing frustration with the company's reluctance to include Bitcoin in its investment products. In the investment community, some clients have expressed frustration with the company's reluctance to include Bitcoin in its investment products.

Despite the controversy and potential market pressure, Vanguard remains steadfast in its traditional investment approach, focusing on asset classes it believes are critical to continued investment success.

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