Eaglebrook Advisors Partners with Franklin Templeton to Launch Bitcoin and Ethereum SMA Strategy

Eaglebrook Advisors, an RIA SMA platform with $225 million in AUM, has partnered with Franklin Templeton to launch a Bitcoin and Ethereum separately managed account strategy. This strategy, designed for RIAs and US-based wealth managers, aims to incorporate digital assets into client portfolios with the support of Franklin Templeton's research and Anchorage Digital's custody services. Despite regulatory challenges, cryptocurrencies continue to see growth, with Bitcoin and Ether showing significant gains year-to-date. SMAs offer tax optimization advantages over ETFs, allowing for reduced capital gains tax liability. Eaglebrook emphasizes that the strategy is not in competition with existing portfolios but rather provides exposure to diversified asset classes with potential for higher returns.

Eaglebrook Advisors Launches Bitcoin and Ethereum SMA Strategy with Franklin Templeton

Bethesda, Maryland-based Eaglebrook Advisors, a registered investment advisor (RIA) and separately managed account (SMA) platform with $225 million in assets under management (AUM), has announced the launch of a Bitcoin and Ethereum SMA strategy in partnership with Franklin Templeton.

Eaglebrook, which serves 70 RIAs managing a collective $300 billion in assets, designed the strategy specifically for RIAs and U.S.-based wealth managers. The SMA strategy will be custodied by Anchorage Digital, the first federally chartered crypto bank, which launched its own SMA offerings in November 2022.

"Backed by Franklin Templeton's deep digital assets research, this partnership aims to provide an accessible and tax-efficient gateway to integrating digital assets into client portfolios," said Chris King, founder and CEO of Eaglebrook. "We remain committed to delivering diversified investment solutions tailored to the evolving needs of advisors and their clients."

The announcement comes amidst a volatile yet lucrative period for cryptocurrencies.

In January 2023, the Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded fund (ETF), marking a significant milestone for the asset class. However, SEC Chairman Gary Gensler cautioned that Bitcoin remains "primarily a speculative, volatile asset that's also used for illicit activity."

The SEC has also intensified its scrutiny of cryptocurrencies in recent months, with a focus on combatting fraud and addressing the collapse of prominent crypto exchanges.

Despite these regulatory headwinds, Bitcoin has posted a 56.42% year-to-date gain as of Wednesday, rising from $44,172 to $69,094. Similarly, Ether has appreciated 49.5% year-to-date, from $2,352 to $3,517.

SMAs offer tax optimization advantages over ETFs, enabling investors and advisors to reduce or defer capital gains tax liability. Eaglebrook's new strategy will be actively managed and seeks to outperform a market cap-weighted portfolio of Bitcoin and Ethereum.

"The primary differentiators between crypto SMAs and spot Bitcoin ETFs are tax optimization and portfolio customization," King explained to RIA Intel. "With crypto SMAs, clients have direct ownership of Bitcoin and digital assets, empowering them to employ automated tax-loss harvesting strategies to mitigate tax liability."

King emphasized that crypto SMAs complement existing portfolios rather than compete with them. "Crypto SMAs are not competing with a market cap-weighted portfolio," he said. "Eaglebrook is providing access to diversified asset classes with the potential for enhanced returns."