Crypto SMA firm Eaglebrook Advisors announced on Monday it has added two digital asset strategies from Cathie Wood’s ARK Invest to its turnkey asset management program (Tamp).
The ARK Cryptocurrency Strategy will hold traditional ‘coins’ like bitcoin and ethereum, while the ARK Cryptoasset Strategy will hold Ark’s ‘best ideas, long only, outside of cryptocurrencies,’ Eaglebrook chief executive Christopher King told Citywire. ‘Think about layer one and layer two protocols, infrastructure, DeFi, gaming and things of that nature.’
The SMAs are actively managed by ARK’s investment team and will carry investment minimums of $50,000. They will be available on Eaglebrook’s platform October 17.
‘Advisors can differentiate themselves and add to a client’s diversification by adding this new asset class to their portfolios. Our partnership combines Eaglebrook’s best in-class technology driven investment platform with ARK’s established digital asset experience,’ stated Wood (pictured).
Eaglebrook, which previously offered its own flagship crypto SMA to RIAs, pivoted last month to a Tamp model where its platform provides access to digital asset portfolios offered by third-party asset managers. The first external SMAs on the platform came last month from Franklin Templeton, which made an investment of undisclosed size in Eaglebrook earlier this year. The firm is also backed by prominent RIA industry figures including Marty Bicknell, Ric Edelman and Mark Casady, as well as a raft of venture capital firms. King said Wood and ARK are not investors in Eaglebrook.
ARK Invest is no stranger to digital assets. The firm was the first major public fund manager to add bitcoin exposure to one of its ETFs, purchasing shares of the publicly traded Grayscale Bitcoin Investment Trust back in 2015.
‘We’re really excited to be working with Cathie Wood and their investment team on this,’ King said. ‘We’ll be partnering on marketing and distribution for these two strategies and we foresee a future where they will be adding more strategies, but probably not until 2023.’
Wood has fared quite poorly through this year’s market drawdown, particularly due woes in the high-growth tech sector. Her flagship ARK Innovation ETF is down more than 61% year-to-date. Some advisors have blasted her far-out predictions – including her $1m price call for bitcoin earlier this year – and have criticized the top-of-market management fees and expense ratios levied by her funds, including the recently-launched ARK Venture interval fund.
King said he’s not phased by the controversy surrounding Wood’s investment philosophy.
‘We want to cover the whole market and offer products to firms across the risk spectrum. The RIAs that they do work with are a little bit further out on the risk curve,’ he said. ‘More conservative RIAs might be more interested in the Franklin strategy.’
King tipped that Eaglebrook plans to add crypto SMAs from more large asset managers next year. For now, the firm will focus on marketing to drive asset inflows for the four existing strategies on its Tamp.
Like Wood, the broader crypto market has floundered this year. Total crypto market cap has fallen from $2.2tn at the start of 2022 to less than $1tn today. Bitcoin is down nearly 60% since the start of the year and is now roughly flat from the start of 2021. The popular terra stablecoin and related token luna lost nearly all of their value in a spectacular collapse, while experimental crypto bank Celsius Network filed for bankruptcy this summer after its customers lost a combined $5bn.
‘Crypto’s price action in the last year suggests that the ecosystem is fundamentally stronger than investors in traditional asset management are willing to acknowledge,’ stated ARK crypto analyst Yassine Elmandjra. ‘Much of the speculative behavior has died down. We believe this presents an attractive entry point for investors.’
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