M3Sixty, a Missouri-based financial services firm, has filed paperwork last week to form the IDX risk-managed Bitcoin ETF.
The fund's primary investments will be in Bitcoin futures contracts and pooled investment vehicles, such as investment firms with a direct or indirect interest in Bitcoin. It may also invest in Canadian ETFs that have direct or indirect exposure to Bitcoin.
The fund will not invest directly in Bitcoin or other digital assets, or non-affiliated OTC trusts such as Grayscale Bitcoin Trust (GBTC). According to the filing, the fund does not seek exposure to Bitcoin's spot price.
The fund does not expect to acquire futures contracts “with maturities more than 90 days,” according to the filing, and anticipates substantial cash holdings, US government assets, and investment-grade fixed-income instruments.
The cash and investment holdings are intended to provide liquidity and to serve as collateral for futures contracts.
Using publicly accessible daily price data, the fund will employ a proprietary quantitative methodology to quantitatively assess the strength of Bitcoin price movements. It will participate in frequent trading, resulting in a portfolio turnover of more than 100%.
Approximately 25% of the fund's assets will be invested in a fully owned Cayman Islands subsidiary.
IDX advisers will oversee the fund's management. M3Sixty's portfolio manager and chief investment officer is Ben McMillan.
There was no ticker shown.
M3Sixty charges a 1.99% management fee, a 0.25% dividend for investor class shares, and a 1.99% management fee for institutional class shares. It is the second digital asset concept under consideration to include a management charge.
ARK became the first issuer to declare a charge for its proposed Bitcoin ETF. Experts predict that ETFs that hold Bitcoin would have higher fees than conventional ETFs due to custody costs.