BNY Mellon: Choosing Gold Over Bitcoin-backed Stocks Led to Fund Underperformance

Published April 30, 2021 | Updated April 30, 2021

In Brief
  • Companies like MicroStrategy (MSTR) – invested heavily in Bitcoin – have delivered 10x returns on Wall Street.
  • Gold mining companies have disappointed investors with their underperformance despite strong indications of inflation.

BNY Mellon: Choosing Gold Over Bitcoin-backed Stocks Led to Fund Underperformance

  • Companies like MicroStrategy (MSTR) – invested heavily in Bitcoin – have delivered 10x returns on Wall Street.
  • Gold mining companies have disappointed investors with their underperformance despite strong indications of inflation.

In its latest filing with the U.S. SEC, banking giant BNY Mellon has conceded that choosing stocks of gold mining companies against the companies invested in Bitcoin (BTC) has led to underperformance in its technology-focused funds.

In its SEC filing submitted on Wednesday, April 28, the world’s largest custodian bank said that it missed out on the crypto opportunity. The filing notes:

“Fund performance was hurt as well by a decision not to own MicroStrategy, whose stock surged when it announced it had invested in bitcoin. As for stock selection, a position in Alamos Gold, a gold mining company, hampered performance as shares were hurt by weak gold prices”.

Public listed Business intelligence firm MicroStrategy (NASDAQ: MSTR) delivered a strong performance on Wall Street since it announced its Bitcoin exposure for the first time in September 2020. Just in six months, the MSTR share price skyrocketed nearly 10x hitting its all-time high of $1272 earlier this year on February 9, 2021.

Courtesy: Google

Although the MSTR share price has corrected 50% from its peak, it is still trading at 5x gains on a one-year chart. Recently, MicroStrategy CEO Michael Saylor announced that the company registered one of the strongest operational quarters in the software business. The company continues to hold 91,579 Bitcoins as of date.

BNY Mellon’s Crypto Push

Alike other traditional banking institutions like Goldman Sachs dabbling into the crypto market, BNY Mellon has also adopted a similar route. Earlier this year in February, BNY Mellon said that it will start offering Bitcoin custodial solutions to its institutional clients.

The bank executive Roman Regelman acknowledged that digital currencies have been becoming part of the mainstream while serving client needs accordingly.

Institutional investors have been increasing their exposure to Bitcoin and the crypto market in recent times. Bitcoin, the Digital gold has increasingly gained strength over the physical yellow metal over the last year. However, Bitcoin critics and Gold backers like Peter Schiff continue to be in denial of Gold’s underperformance in the current market conditions.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Bhushan Akolkar 432 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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