Vanguard, one of the world’s largest asset managers with over $10 trillion under management, has become the biggest shareholder in a Bitcoin-heavy company called Strategy (formerly MicroStrategy). Vanguard owns more than 20 million shares of Strategy, making up about 8% of the company’s total stock. This happened not because Vanguard chose to invest in Strategy directly, but because it runs index funds.
This is surprising because Vanguard has long said it doesn’t support cryptocurrencies and has called Bitcoin too risky for long-term investors. Vanguard, following founder Jack Bogle’s views, has long rejected cryptocurrencies, calling Bitcoin too risky and unsuitable for long-term investing.
They even blocked Bitcoin ETFs from being traded on their platform in the U.S., saying clearly: “We don’t believe it belongs in a long-term portfolio.” Vanguard’s mutual funds and ETFs track broad indexes like small-cap, mid-cap, value, growth, and momentum. Since Strategy was added to widely followed indexes like the Nasdaq 100, Vanguard was obligated to buy its stock, even if it doesn’t support the business model.
A Strategy Fueled by Bitcoin
Strategy, led by strong Bitcoin supporter Michael Saylor, has completely changed its focus to Bitcoin. The company has raised money by selling shares and taking on debt to buy large amounts of Bitcoin. Many other companies have started copying this strategy. Strategy’s stock has reached to its all-time high by about 4000%.
Today, Strategy is the biggest holder of Bitcoin, with over $70 billion worth of it. Saylor himself owns nearly 20 million shares of the company. He said, “The fact that Vanguard owns such a big share shows that Bitcoin is being accepted by traditional finance as a real and valuable asset.”
Vanguard’s Accidental Bitcoin Bet Pays Off
Even though Vanguard didn’t buy Strategy on purpose, the investment has done really well. In just two years, Strategy’s stock is up more than 850%, which is even more than Bitcoin’s 300% rise. That means investors in Vanguard funds may be indirectly exposed to crypto, even if they don’t know it.
The biggest chunk of Vanguard’s holdings comes from its $1.4 trillion Total Stock Market Index Fund (VITSX), which owns 5.7 million shares in Strategy (worth ~$2.6 billion). Other funds with Strategy shares include the Extended Market Index Fund, Growth ETF, Momentum ETF (VFMO), and Strategic Equity Fund (VSEQX). While a few of these are actively managed, most follow market indexes or rule-based models.
Michael Saylor says he’ll never sell his Bitcoin and that mindset is actually similar to Vanguard’s long-term investing style. One expert even joked, “God has a sense of humor,” because Vanguard now benefits from the very thing it has warned against for years.
Also Read: OG Bitcoin Wallet Moves $2.42B in BTC After A Long Silence
