KEY POINTS
- Vanguard views crypto as "more of a speculation than an investment"
- Vanguard on crypto: "it's an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio'
- Jack Bogle delivered a stern warning in 2017, advising people to "avoid Bitcoin like the plague"
The introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States marked a significant milestone in the cryptocurrency market. However, Vanguard, renowned as the world's largest mutual fund issuer and the second-largest issuer of exchange-traded funds, drew considerable attention when it unequivocally declined to participate in the newly approved trusts. In a recent official statement, Vanguard offered a comprehensive explanation for its decision.
"In Vanguard's view, crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products, whether our own or others," Janel Jackson, Vanguard's Global Head of ETF Capital Markets and Broker and Index Relations said in a recent investor education blog.
"With equities, you own a share of a company that produces goods or services, and many also pay dividends. With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios. While crypto has been classified as a commodity, it's an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio," the executive added.
Firmly communicating the company's position, Jackson stated definitively that there are no imminent plans to launch a Bitcoin ETF or any other cryptocurrency-related products--a decision that aligns with Vanguard's assessment of cryptocurrencies' present position within the spectrum of asset classes.
"Given the current state of crypto as an asset class, Vanguard does not have plans to launch its own bitcoin ETF or any crypto-related products. When deciding what investment products to offer, we consider a range of factors, including whether we believe they have enduring investment merit and meet our clients' needs. While the discussion about bitcoin and cryptocurrencies, in general, has increased recently, we do not currently believe that there is an appropriate role for them to play in long-term portfolios," Jackson said.
Back in 2017, the renowned investor and founder of the Vanguard group Jack Bogle delivered a stern warning, advising people to "avoid Bitcoin like the plague."
Fast forward more than six years, Vanguard Group Inc. continues to provoke reactions within the crypto community by adhering to the conservative investment philosophy laid down by its late founder.
When Vanguard made the decision to exclude the new Bitcoin ETFs from its extensive trading platform, the hashtag #BoycottVanguard quickly gained traction on the social media platform X (formerly Twitter). Thousands of posts flooded in, with users passionately advocating for the withdrawal of their funds from the asset management giant.
However, instead of yielding to the pressure, Vanguard reaffirmed its stance and remained resolute in its decision.
