Franklin Templeton prepares the first institutional crypto accounts
- The company offers a market-cap-weighted strategy that invests in 10-15 of the largest digital assets, as well as a similar strategy that limits allocations to BTC and ETH.
- Franklin Templeton made a strategic investment in the SMA Eaglebrook Advisors platform in April
Franklin Templeton is set to offer cryptocurrency-focused Separately Managed Accounts (SMA) to investment professionals for the first time.
The move is the latest example of a traditional finance giant plunging into digital assets, despite the ongoing bear market. Separately managed accounts are sometimes preferred by institutional investors over mixed funds, as they come with personalized strategy and risk profiles, as well as instant liquidity.
Launches follow those of Franklin Templeton strategic investment on the SMA Eaglebrook Advisors platform in April. The first $1.4 trillion asset manager’s crypto strategies will be available to financial advisors and wealth managers working with US investors through Eaglebrook’s turnkey platform by mid-October.
Roger Bayston, head of digital assets at Franklin, told Blockworks that the company’s registered investment adviser (RIA) partners are increasingly interested in alternative investments, including crypto. But regulatory ambiguity in the United States means that crypto-assets are not yet securities, he added.
“Custom SMAs are a perfect delivery mechanism for these assets built by sound advice,” Bayston said in an email. “SMAs are a big business in traditional finance, and we are embedding these digital assets into a high-quality product offering delivered through RIAs. This is a further extension of what we do.
Eaglebrook Advisors CEO Christopher King says Franklin Templeton’s new offerings represent “an inflection point” for crypto as the US wealth management market demands digital asset SMA strategies managed by professionals from trusted asset managers.
He called the segment the “lowest fruit” for the crypto market in an interview with Blockworks last year, adding at the time that around 95% of the advisor market had yet to invest in cryptocurrencies. crypto-assets.
“We work together on the sale and distribution of these strategies and help wealth managers and the clients they serve understand the digital asset market,” King told Blockworks.
Franklin Templeton’s Digital Assets Core SMA is a market-cap-weighted strategy that invests in 10-15 of the largest digital assets, excluding stablecoins and meme coins.
Its Digital Assets Core Capped SMA takes a similar approach, but caps its allocations to bitcoin (BTC) and ether (ETH) at 25% of the portfolio each.
Although competing asset managers, such as BlackRock and Fidelity, launched ETFs focused on blockchain technologies in April, Bayston said Franklin Templeton was still considering the right time for an entry.
In April, Fidelity decided to allow certain American workers to allocate a portion of their retirement savings to bitcoin through the company’s 401(k) plan investment suite. BlackRock, the world’s largest asset manager with around $8.5 trillion, partnered with Coinbase last month and days later launched a private bitcoin trust.
“I’m sure more and more TradFi companies are gearing up to enter this innovation-driven asset class,” said CK Zheng, a former Credit Suisse executive who co-founded crypto hedge fund ZX Squared. Capital last year. “While we can’t predict when the crypto winter will end, we do know that much of the demand from institutional investors and high net worth individuals will come when the next crypto bull market begins.”
Franklin Templeton’s product rollout came on the same day as Mysten Labs’ $300 million fundraising. The asset manager participated in the Series B round – valuing infrastructure company Web3 at around $2 billion – alongside FTX Ventures, a16z and others.
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