Former Pimco Exec Sees Digital Asset Growth

Bill Powers, a former fixed-income portfolio manager and member of the investment and executive committees at Pimco, has joined Arca as a principal and strategic advisor. Powers spent 19 years at Pimco, where he launched and oversaw the firm's global portfolio management operations in London, Tokyo, Sydney, Toronto, Munich and Singapore. He previously worked at Bear Stearns and Salomon Brothers. Powers told Markets Media that blockchain "is here to stay" and that firms that understand the technology, or partner with those who do, will earn outsized returns over a long period. He compared the expected trajectory of digital assets to that of email, which took years to become commercially viable and widely adopted.

Arca, a digital asset manager, launched the Arca US Treasury Fund last year. According to the firm, it is the first fund offering digital shares registered with the US Securities and Exchange Commission. The closed-end fund invests in US Treasuries under the Investment Company Act of 1940 and uses blockchain technology to create Arcoin, a digital security in which each token represents one share of the fund. Accrued interest is paid directly to Arcoin holders each quarter. Arca recently announced an Accredited Investor Bitcoin Trust, which it says offers daily liquidity, low minimums and low fees for institutional clients who face high costs to acquire, store and manage Bitcoin.

Arca closed a $10m Series A funding round in January 2021, led by RRE Ventures with additional participation from Alex Tisch, president of Loews Hotels, and a coalition of senior financiers led by Littlebanc Advisors. Proceeds will fund expansion and product development, including Blockchain Transferred Funds (BTFs) through Arca Labs, the firm's innovation division. Chief executive Rayne Steinberg, co-founder of WisdomTree, said the round allows the firm to accelerate active management products and recruit senior executives from financial institutions. Steinberg said institutions "have crossed the rubicon" in their view of digital assets, a shift he said was not the case at the start of 2020.

Powers noted that when he joined Pimco in 1991, the firm managed $29bn, a figure that has grown to roughly $1.5 trillion. He said institutional investors at that time typically held 60% in equities and 40% in fixed income, and that institutions currently are unlikely to hold more than 10-15% of portfolios in digital assets. Separately, Bloomberg Intelligence reported that Bitcoin is accelerating as a replacement for gold as a store of value. It forecasts that assets in the Grayscale Bitcoin Trust will pass those of SPDR Gold Shares (GLD) by June or July 2021. BI commodity strategist Mike McGlone said gold's diminishing potential for sustained price advances, relative to Bitcoin, reflects a shift toward digital assets.