South Africa’s Sygnia, which started a Bitcoin exchange-traded fund in June, says it will dissuade investors from switching all their assets into the high-risk crypto fund.
The Sygnia Life Bitcoin Plus fund uses the iShares Bitcoin Trust ETF as the benchmark, according to a fact-sheet on the asset manager’s website.
Bitcoin, which has jumped 82% in the past 12 months, fell 2.3% to $112,735.12 as of 10h18 in Johannesburg.
The world’s biggest cryptocurrency is prone to wild swings even though volatility has dropped to about 40% from close to 200% more than a decade ago.
Bitcoin and other cryptoassets have benefited from the election of US President Donald Trump, an industry champion whose family is building a crypto empire.
“We actually intervene with a view of stopping the investor from doing something silly by switching,” Magda Wierzycka, chief executive officer at Sygnia, which has R350 billion of assets under management, said in an interview with Bloomberg TV.
Cryptocurrencies should form a very small portion of a diversified investment strategy instead of betting everything on Bitcoin, she said.
For an emerging market such as South Africa, extreme movements can wipe out the life savings of individuals in a country where the per capita gross domestic product is $15,990 — that’s 78% less than advanced economies.
Wierzycka, who says that Bitcoin is overpriced, has changed her view on the digital currency and no longer sees it as speculative but as a “long-term play.”
Sygnia plans to start other crypto ETFs on the Johannesburg Stock Exchange — after a previous failed attempt — once regulatory constraints are resolved, Wierzycka said.
The Cape Town-based firm’s Sygnia Life Bitcoin Plus fund has seen “very, very significant” inflows and a lot of interest among Bitcoin enthusiasts, the CEO said without disclosing details on inflows.
The firm advises investors not to put more than 5% of their “living annuity or discretionary assets in these funds,” according to the fact-sheet.
Sygnia calls investors to warn them if the company sees that investors are switching to the Bitcoin fund, the CEO said.
“The underlying asset is highly volatile,” Wierzycka said. “You need to be very sure about the messaging around it and you need to be sure that you don’t make promises that you can’t meet.”