Ever since its launch back in January 2024, the iShares Bitcoin Trust (IBIT +0.97%) from BlackRock (BLK 1.47%) has been the most popular spot Bitcoin (BTC 0.94%) ETF. It now has $55 billion in assets under management (AUM). By way of comparison, its next-closest competitor has only $13 billion in assets under management.
However, that might be about to change. In early April, Wall Street investment bank Morgan Stanley (MS 0.15%) created a stir with the launch of its new spot Bitcoin ETF called the Morgan Stanley Bitcoin Trust (MSBT +1.05%). If you are thinking about investing in Bitcoin, there's a very compelling reason why you should be considering it for your portfolio.
ETF expense ratios
One of the most important factors that investors should be taking into consideration are the expenses involved in managing any ETF. As a rule of thumb, the expense ratio should be below 1%. And the closer to zero it gets, the better it is for the individual investor.
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That's what makes the iShares Bitcoin Trust so compelling: Its management fees are just 0.25% annually. Other Bitcoin ETFs have pared down their expense ratios to 0.19% in an attempt to win over investors. Those are razor-thin margins, and it was hard to imagine anyone else ever going lower.
But that's exactly what Morgan Stanley did with its Bitcoin ETF. The annual expenses are a minuscule 0.14%. That makes it the cheapest Bitcoin ETF you can buy these days.
Beyond spot Bitcoin ETFs
Most likely, the Morgan Stanley Bitcoin Trust will be the last "vanilla" Bitcoin ETF that launches for some time. Already, there are nearly a dozen different spot Bitcoin ETFs, and some of them are from some of the biggest names in the investment industry like Fidelity Investments.
CRYPTO: BTC
Key Data Points
That being said, more exotic Bitcoin ETFs from Wall Street are on the way. The really interesting one is a proposed new Bitcoin ETF from Goldman Sachs (GS +0.06%) called the Bitcoin Premium Income ETF, which is still wading through the approval process with the SEC. As you might have guessed from the name, it includes a few bells and whistles. It will employ an options trading strategy using Bitcoin ETFs to generate income for investors.
And the winner is...
For individual investors, it's important to shop for the lowest expense ratios possible, and to focus on ETFs that invest only in spot Bitcoin. That ensures that you are getting near-perfect exposure to the price action of Bitcoin, and nothing more. There are no hidden risks that you need to be worried about -- such as volatile financial derivatives -- when adding it to your portfolio.
Given that MSBT has lower expenses than IBIT and invests only in spot Bitcoin, it might just be the best Bitcoin ETF you can buy. Thus far, overall market reaction to this ETF has been hugely popular, and it's not hard to see why: Buying Bitcoin has never been cheaper or easier.
