BNY Mellon Says Fund Performance Hurt By Lack Of Exposure To Bitcoin Stocks

Wall Street banking giant Bank of New York Mellon Corp BK said the performance of one of its exchange-traded funds was considerably impacted by its lack of exposure to crypto stocks.

What Happened: In a recent SEC filing, the bank said that the BNY Mellon Opportunistic Small Cap Fund (MUTF: DSCVX) could have performed better if it had invested in a certain Bitcoin stock.

“Fund performance was hurt as well by a decision not to own MicroStrategy, whose stock surged when it announced it had invested in bitcoin,” stated BNY Mellon in the filing.

MicroStrategy Incorporated MSTR shares have surged over 439% since its first $250 million Bitcoin purchase in August 2020.

The company has since accumulated more and more of the leading digital asset, and at press time, the company’s Bitcoin holdings were worth over $4.9 billion.

BNY Mellon’s SEC filing also noted that the investment in a gold mining company Alamos Gold Inc AGI hampered fund performance, as shares were hurt by “weak gold prices.”

The fund achieved a total return of 34.88% over the past six months, underperforming its benchmark index, the Russell 2000 Index, which returned 41.69% during the same period.

“The fund underperformed the Index, mainly due to unfavorable stock selection and sector allocation,” said the fund’s portfolio managers.

What Else: Earlier this year, BNY Mellon announced it would provide custody services for cryptocurrencies through its new enterprise Digital Assets unit.

See also: Report: JPMorgan Prepares To Launch Actively Managed Bitcoin Fund

A month later, the bank invested in crypto custodian Fireblocks in part of its $133 million Series C funding round.

“Developing products to bridge digital and traditional assets is foundational to the future of custody,” said Roman Regelman, Chief Executive Officer of Asset Servicing and Head of Digital at BNY Mellon.