With Bitcoin all over the news and media, more and more people are wondering how to access the cryptocurrency.
The good news is that there are alternatives to purchasing Bitcoin in your crypto wallet – you can access it through investment funds.
Over 50% of both retail and institutional investors believe that crypto is a trustworthy investment.
There are quite a few reasons that you may want to invest in Bitcoin through a fund:
- Some account types in Canada (and the US) are tax-advantaged
- Simpler to trade and monitor as part of your overall portfolio
- Most funds hold Bitcoin in an offline cold wallet – protected from theft and hacking
We’ll cover the best Bitcoin funds in Canada, and outline some of their features below.
Table of Contents show
Best Bitcoin Funds in Canada
Although our list focuses on ETFs, we’ll cover some mutual fund options as well in a later section.
1. CI Galaxy Bitcoin ETF
- Ticker – TSE: BTCX.B, BTCX.U
- Inception Date: March 5, 2021
- Assets under Management: $338 million
- Management Expense Ratio: 0.85%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
CI’s Galaxy Bitcoin ETF offers an institutional-quality fund platform for accessing Bitcoin. CI is one of the largest Canadian asset managers.
BTCX is a large ETF, with the lowest MER on this list.
BTCX.B is the Canadian dollar unhedged version and BTCX.U is the US dollar version of the ETF. It can be purchased in registered and non-registered accounts.
BTCX’s Bitcoin is stored in an offline cryptocurrency wallet, called cold storage. This is the safest approach to storing ether as it protects it from hackers.
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2. Evolve Bitcoin ETF
- Ticker – TSE: EBIT, EBIT.U
- Inception Date: February 17, 2021
- Assets under Management: $93.8 million
- Management Expense Ratio: 1.82%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
Evolve’s ETF is one of the smaller Bitcoin funds on this list. Its MER is also relatively high, considering other funds on our list.
EBIT is the Canadian dollar unhedged version and EBIT.U is the US dollar version of the ETF. It can also be purchased in registered and non-registered accounts.
Evolve uses cold storage for its Bitcoin holdings, similar to other funds on our list.
Although Evolve’s ETF launched fairly early compared to its peers, it hasn’t managed to attract a lot of assets. This is likely due to its higher fees.
3. Purpose Bitcoin ETF
- Ticker – TSE: BTCC, BTCC.B, BTCC.J, BTCC.U
- Inception Date: February 11, 2021
- Assets under Management: $1.4 billion
- Management Expense Ratio: Up to 1.50%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
Purpose offers several options with its Bitcoin ETF. BTCC is massive in terms of assets, and its MER is fairly high compared to its peers.
BTCC, like the other ETFs, holds Bitcoin in cold storage. Despite the higher MER, Purpose does offer the most flexibility in terms of ETF series:
BTCC
BTCC is the currency-hedged version of Purpose’s Bitcoin ETF. It hedges out currency fluctuations between the US dollar and Canadian dollar.
BTCC.B
BTCC.B is the unhedged Canadian dollar version. Similar to most other unhedged ETFs on the list, it will cause currency fluctuations between the US dollar and Canadian dollar to impact your total returns.
BTCC.U
BTCC.U is the US dollar version of the ETF. This version can be held on the US side of your accounts.
BTCC.J
BTCC.J is the carbon offset version of the ETF. BTCC.J allows investors to 100% offset their carbon emissions from their investment. This version is offered in Canadian dollars and is unhedged.
Purpose is a great provider if you are looking for additional options when investing. Our review of BTCC covers its features in more detail.
- Ticker – TSE: BTCQ, BTCQ.U
- Inception Date: March 31, 2021
- Assets under Management: $773.2 million
- Management Expense Ratio: Up to 1.25%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
3IQ also offers a Bitcoin ETF, although they are less known in the general Canadian investment space. They are the largest digital asset fund manager in Canada.
BTCQ is large in terms of assets, with an average MER. BTCQ.U is the US dollar version of the ETF, while BCTQ is the unhedged Canadian dollar option. BTCQ will pass along currency fluctuations between the US dollar and Canadian dollar to investors.
BTCQ holds its Bitcoin in cold storage.
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5. Ninepoint Bitcoin ETF
- Ticker – TSE: BITC, BITC.U
- Inception Date: January 27, 2021
- Assets under Management: $46.7 million
- Management Expense Ratio: Up to 1.45%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
BITC is a small Bitcoin ETF offered by Ninepoint. Its MER is fairly average, compared to other options.
Similar to Purpose’s BTCC.J ETF, BITC offsets its carbon emissions, which may be attractive for some investors. It does this by using a portion of the management fees that Ninepoint charges.
BITC is the Canadian dollar unhedged version and BITC.U is the US dollar version of the ETF. Ninepoint uses cold storage for its Bitcoin holdings.
Since Ninepoint’s ETF is very small compared to its peers, it does face the risk of early closure if the fund’s asset level drops significantly.
6. Fidelity Advantage Bitcoin ETF
- Ticker – TSE: FBTC, FBTC.U
- Inception Date: November 30, 2021
- Assets under Management: $25.4 million
- Management Expense Ratio: Up to 0.95%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 0%
FBTC is another very small Bitcoin ETF offered by Fidelity. Fidelity is a very well-known name in the asset management space.
The ETF’s MER is low compared to other funds on our list. Unfortunately, the fund’s low assets put it at risk of early closure.
FBTC is the Canadian dollar unhedged version and FBTC.U is the US dollar version of the ETF. Fidelity stores a minimum of 98% of the fund’s Bitcoin in cold storage, which is lower than other funds.
Fidelity started managing its Bitcoin ETF significantly later than its competitors, which is likely a cause for its low asset level.
7. Purpose Bitcoin Yield ETF
- Ticker – TSE: BTCY, BTCY.B, BTCY.U
- Inception Date: November 30, 2021
- Assets under Management: $40.6 million
- Management Expense Ratio: 1.41%
- Listed on: Toronto Stock Exchange
- Distribution Yield: BTCY: 17.82%, BTCY.B: 17.55%, BTCY.U: 22.54%
Our last Bitcoin ETF is also offered by Purpose. It uses a covered call strategy to offer investors a very high annualized distribution. This is paid out to investors monthly.
How a Covered Call Works
Covered calls are fairly straightforward in terms of option strategies.
In simple terms, it involves selling any growth beyond a specific price, called the strike price, for a specific amount of money today (called the premium).
If the price of the security skyrockets much higher than the strike price, you will keep any profits up to the strike price, as well as the premium (for selling the upside beyond the strike price).
If the price of the security falls, your premium will somewhat protect you on the downside. There are other features to covered calls that you should consider before implementing the strategy.
A visual example can be found within BTCY’s brochure:
Since Bitcoin is a very volatile asset, the premiums for writing covered calls on it can be astronomical. This allows for the fund to pay an annualized yield of over 17.5%.
BTCY’s MER is fairly average compared to the other non-yielding Bitcoin funds. It is a very small ETF which puts it at risk of closing. This is likely due to its late inception date.
Purpose’s BTCY ETF is unique and may be extremely attractive for high-risk investors looking for a high yearly income stream.
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Which Bitcoin Fund is Best?
The first six Bitcoin ETFs on our list provide regular exposure to Bitcoin’s price. If you are looking for monthly income from your Bitcoin investment, BTCY is likely your best option.
The criteria for the best Bitcoin fund are fees and ETF size. The lower a fund’s MER, the more of the underlying returns that an investor receives.
The larger an ETF is, the lower the chance that it will close down early in the future due to size and profitability issues. A larger ETF can also sometimes mean that it is more liquid, meaning that it trades more often and at a tighter bid-ask spread.
With this in mind, CI’s Galaxy Bitcoin ETF takes the top spot. Purpose’s Bitcoin ETF also offers currency hedging and carbon offsetting, which can be invaluable to certain investors.
Bitcoin Mutual Funds in Canada
Several of the Bitcoin ETF providers above also offer Bitcoin mutual funds.
ETF vs Mutual Fund
Here are some general differences between ETFs and mutual funds:
- ETFs trade on an exchange and can be bought or sold throughout the day; mutual funds cannot
- ETFs can be shorted and can sometimes have options available
- ETFs trade at a bid-ask spread, which can be significant depending on the ETF’s liquidity
- Mutual fund purchases do not have a bid-ask spread
These are only some of the differences between the two structures. Make sure you are aware of all of them before purchasing an ether fund.
From the above ETF providers, the following also offer Bitcoin mutual funds:
Bitcoin Stocks in Canada
A stock refers to ownership in a publicly-traded company, meaning Bitcoin stock can’t exist. Bitcoin can be accessed directly through a crypto wallet, through a fund (ETF or mutual fund), or through Bitcoin futures.
Despite this, crypto stocks do exist. These stocks allow you to invest in blockchain companies or technologies. While it’s likely that these stocks will be highly correlated to underlying cryptocurrency prices, they are a different kind of investment.
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Riskiness of Bitcoin
In all cases, Bitcoin is currently considered a high-risk investment. Although the price of one Bitcoin has skyrocketed since the cryptocurrency’s creation, it’s hard to predict where the price will land.
Since there is a finite amount of Bitcoin that can be mined, the supply of Bitcoin will eventually become constrained. We believe that the main driver of Bitcoin’s price will be on the demand side.
If Bitcoin becomes increasingly adopted and used around the world, it should be extremely favourable for Bitcoin’s price.
Bitcoin could fail to make meaningful progress as a fiat currency replacement, or lose its spot as the most popular cryptocurrency. In this case, Bitcoin prices could come crashing down significantly.
How to Buy the Best Bitcoin Funds in Canada
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
Readers Choice
Qtrade
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Wealthsimple Trade
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Questrade
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Conclusion
With Bitcoin still gaining popularity and acceptance, now may be a good time to consider adding an allocation to your portfolio.
Accessing Bitcoin through a fund allows you to include it in your traditional investment accounts, offering potential tax advantages.
If you are looking to buy a Bitcoin ETF, make sure to understand your options when it comes to adding it to your investment portfolio.
