Itau Unibanco, Latin America's largest private bank, has advised its investment arm to allocate a limited but strategic place to Bitcoin in its portfolio.
Renato Eid, Head of Beta Strategy and Responsible Investment at Itau Asset Management, said in a research note that an “adjusted” portfolio allocation for Bitcoin of 1 to 3 percent is reasonable.
Eid stressed that crypto assets should not form the main backbone of a portfolio, suggesting that Bitcoin should be seen as a complementary element.
He says this approach offers the potential for returns that are less correlated to local economic cycles, while providing partial protection against currency depreciation and the potential for long-term currency appreciation. Eid also emphasized the importance of a long-term perspective and warned against the risks of trying to time the market.
The research note also mentions Itau's product BITI11 Bitcoin ETF, which trades on Brazilian exchange B3.
Developed in partnership with Galaxy Digital, the product launches in 2022 and has approximately $115.6 million in assets under management. Eid said adding BITI11 to its portfolio offers dual opportunities in terms of “international diversification and global preservation of value”.
This recommendation is also driven by currency volatility, a problem specific to Brazil. Interest in globally priced assets is growing as the Brazilian real falls to historic lows against the dollar by the end of 2024.
Itau’s proposal signals the increasing acceptance of crypto assets in the traditional financial world, a trend supported by the fact that major global companies like Bank of America are proposing similar crypto allocation ratios.
*This is not investment advice.
