UAE-based low-cost robo-advisory platform Sarwa launched Sarwa Crypto portfolios on Thursday to tap investor demand for digital currencies despite price volatility.
The new portfolios will be globally diversified across asset classes such as stocks, bonds and real estate investment trusts and also offer a 5 per cent exposure to Grayscale Bitcoin Trust, a large US-based publicly-quoted Bitcoin investment vehicle, the company said.
The investment platform said the new product would make a “complex and inaccessible asset class” easier to invest in.
“There is a significant amount of interest around cryptocurrency and specifically Bitcoin in the region. At the same time, there are a lot of barriers to safely buy and sell these assets – including not knowing where to start,” said Mark Chahwan, chief executive and co-founder of Sarwa.
“Our clients were looking for ways to be exposed to Bitcoin. With Sarwa Crypto they can now have exposure to Bitcoin in a smart and diversified way.”
Retail investors want direct access to markets with the help of technology, leading to a surge in popularity for zero-commission trading apps such as Robinhood, eToro, Interactive Brokers and Sarwa. Demand for trading apps jumped during the Covid-19 pandemic due to monetary easing by the US Federal Reserve and other central banks, giving people more money to invest during pandemic lockdowns.
Cryptocurrencies are not licensed by the UAE Central Bank, although a number of cryptocurrency exchanges have been given permission to operate within the ADGM. The UAE dirham is the only legal tender in the country that is recognised by the Central Bank.
The Grayscale Bitcoin Trust has attracted huge inflows of capital from investors in the US, including the likes of asset manager facility. It currently manages $21.1 billion of investor funds, according to its website. It charges a 2 per cent annual fee to investors.
A number of other asset managers – including Fidelity, Wisdomtree, VanEck and First Trust Skybridge – have filed applications to the US Securities and Exchange Commission to offer Bitcoin ETFs, but none have yet been approved.
Sarwa’s new product will offer investors exposure to Bitcoin in the form of a security but avoid the challenges of buying, storing and safekeeping the digital currency directly, the company said.
The Sarwa Crypto Portfolio is offered by Sarwa Digital Wealth Capital and regulated by Abu Dhabi Global Market’s Financial Services Regulatory Authority, according to the statement.
It will offer free and easy withdrawals and deposits, access to human advice, smart rebalancing and an all-in-one management fee, the company said.
“Bitcoin has a lot going for it as a potential store of value, but it’s also relatively new and very volatile. The reality is it is still a speculative asset, yet each year it survives, it becomes more valuable. Having a globally diversified portfolio with a small exposure to Bitcoin is … a safe and secure way of having exposure to [the digital asset],” Mr Chahwan added.
He warned people not to invest because of the “hype and a get-rich mentality”, but instead opt for a smart approach to investing to build wealth.
Sarwa Crypto Portfolios are based on the same data-driven strategy and offer the same global diversification as Sarwa Invest portfolios, the company said. Customers choose their own risk profile and are offered access to low-cost globally diversified portfolios that match this.
The company currently has more than 40,000 registered users, the statement said.
