Vanguard CEO says Bitcoin ETFs do not ‘belong in a long-term portfolio’

Vanguard CEO Tim Buckley said Bitcoin needs to “change as an asset class” for the investment firm to consider it as a viable option and has no intention of changing its mind about spot Bitcoin ETFs until that happens.

Buckley made the statement in a preview clip of an upcoming webcast posted on March 15. The full conversation with CIO Greg Davis will be published on March 19.

Too volatile

Buckley said that Vanguard does not intend to change its stance toward the spot Bitcoin ETFs, primarily because it does not believe they belong in long-term and retirement portfolios. He added:

“Something like bitcoin is just too volatile and it’s not a store of value —it hasn’t been… It is speculative, really tough to think about how it belongs in a long-term portfolio.”

The Vanguard CEO said that Bitcoin prices recently fell alongside stock prices, and it is difficult to predict the flagship crypto’s growth. These factors make it difficult to determine how to include Bitcoin ETFs in portfolios.

Buckley said the firm focuses on investing in asset classes with underlying cash flows, such as stocks or bonds, which are easier to value and model.

Buckley plans to retire before the end of 2024 but his departure is unlikely to change Vanguard’s stance as the beliefs are part of the firm’s investment philosophy.

Vanguard’s past complaints

Vanguard previously confirmed that it would not offer access to spot Bitcoin ETFs shortly after the funds gained approval in January 2024. The company commented more extensively on its concerns later in the month and said that Bitcoin was an “immature asset class.”

Vanguard’s Global Head of ETF Capital Markets and Broker and Index Relations, Janel Jackson, notably commented that crypto “can create havoc within a portfolio” due to its short history and lack of inherent value and cash flow.

Meanwhile, the firm’s Head of Brokerage & Investments, Andrew Kadjeski, explained that the firm aims to serve long-term, buy-and-hold investors.

The company’s history of avoiding short-term market trends, including steering clear of internet funds in the 1990s and removing access to leveraged and inverse funds and ETFs in 2019 and over-the-counter stocks in 2022, illustrates a historic strategy of prioritizing long-term stability over short-term gains.

Vanguard’s stance has generated significant discussion within the investment community, with some clients expressing frustration over the firm’s reluctance to include Bitcoin in its investment offerings.

Despite the controversy and potential market pressure, Vanguard remains steadfast in its traditional investment approach, focusing on asset classes it deems fundamental for sustained investment success.