Correlation analysis reports from financial data platforms

BlackRock's $11.5 Trillion AUM Recommends 1-2% Bitcoin Allocation, Citing Similar Risk to Magnificent Seven Stocks

Dec 12, 2024, 02:53 PM

BlackRock Inc., the world's largest asset manager with $11.5 trillion in assets under management, has recommended that investors consider allocating up to 2% of their portfolios to Bitcoin. This recommendation comes from a research report by the BlackRock Investment Institute titled 'Sizing Bitcoin In Portfolios,' which compares Bitcoin's risk profile to that of the 'Magnificent Seven' technology stocks, including Apple, Amazon, Meta, and Google. The report, authored by BlackRock's Chief Investment Officer for ETFs and Index Investments, Samara Cohen, suggests that Bitcoin, despite its volatility, offers unique benefits as a portfolio diversifier due to its historically low correlation with traditional markets. A 1% to 2% allocation in a standard 60/40 investment portfolio would yield a risk profile similar to holding a single prominent tech stock. However, the firm cautions against higher allocations due to Bitcoin's volatility, which could significantly increase overall portfolio risk. Bitcoin's price has gained more than 130% in the last 12 months, compared to a 32% gain for the S&P 500. BlackRock's iShares Bitcoin Trust (IBIT) has become the world's largest Bitcoin ETF, with $50.8 billion in assets under management.