The fund is being launched by Digital Funds, a new digital asset manager.

Digital Funds LLC, a new digital asset manager helmed by founder Michael Willis, has filed for the Digital Funds S&P 500 Bitcoin 75/25 Index ETF which will provide investors with exposure to both the S&P500 as well as bitcoin in a [75:25] ratio. (Blockworks)

The fund will benchmark against the S&P 500 Bitcoin 75/25 Blended Index. The Index measures the weighted return performance of a multi-asset strategy that consists of a 75% weight in the S&P 500 Index and a 25% weight in the S&P Bitcoin Index.

Digital Funds S&P 500 Bitcoin 75/25 Index ETF

Accordingly, the ETF will invest approximately 75% of its assets in large U.S. companies that comprise the S&P 500 Index and will invest in bitcoin futures contracts so that the total value of the bitcoin to which the ETF has economic exposure is approximately 25% of the assets of the ETF.

Note that the fund will not invest in, or seek direct exposure to, the “spot” or cash price of bitcoin.

“In certain circumstances, such as unusual market conditions with respect to bitcoin futures contracts, the Fund may obtain indirect exposure to bitcoin through investment in the Grayscale Bitcoin Trust or through foreign exchange-traded funds that hold an interest in bitcoin,” states the filing.

The purpose of marrying exposures to stocks and bitcoin

According to fund manager Willis, the S&P500 would impart stability to the fund’s 25% exposure to bitcoin, which he termed as a “really volatile” asset.

“The apex asset for Wall Street is the S&P 500 Index, and the apex asset for the digital world is bitcoin,” Willis told Blockworks.

Digital Funds is also mulling a filing for a spot bitcoin ETF, even though in Willis’ mind, there is only a limited chance that the SEC will green-flag such an ETF any time soon.

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