We provide a comprehensive analysis of the Vault International Bitcoin Fund (VIBF), examining its fee structure, investment strategy, advantages, drawbacks, alternatives, public perception, and essential details for potential investors.
Key Takeaways
- First NZ Bitcoin Fund: Launched in October 2021, VIBF enables New Zealanders to invest in Bitcoin through a regulated fund structure via the InvestNow platform.
- Fee Structure: 2.50% annual management fee + 0.25% buy/sell spread. While higher than traditional funds, this aligns with crypto investment norms.
- Risk Profile: Classified as a "highly speculative" investment (Risk Indicator 7/7) due to Bitcoin’s inherent volatility.
- Tax Efficiency: Structured as a PIE (Portfolio Investment Entity), offering tax advantages under Fair Dividend Rate (FDR) rules.
- Underlying Holdings: Invests in four established Bitcoin ETFs/Grayscale Trusts across US and Canadian markets.
Fund Overview
Fees and Investment Terms
- Management Fee: 2.50% p.a.
- Buy/Sell Spread: 0.25% per transaction.
Minimum Investment:
- Initial: $250 (via InvestNow)
- Additional: $50
Key Features
- NZD-Denominated: Eliminates direct forex exposure for NZ investors.
- Diversified Exposure: Invests in multiple Bitcoin ETFs (Grayscale, Purpose, CI Galaxy, 3IQ).
- PIE Tax Benefits: No capital gains tax; capped PIR rates (10.5%–28%).
- Liquidity: Redemptions processed within 5 business days.
Pros and Cons
Advantages
✅ Simplified Access: No need for direct crypto wallet management.
✅ Regulated Structure: Managed by Implemented Investment Solutions ($5B AUM).
✅ Cost-Effective: Bundles forex, brokerage, and network fees into a single 0.25% spread.
Drawbacks
❌ High Fees: 2.50% p.a. exceeds traditional index funds.
❌ Limited Liquidity: Trades only during market hours (unlike 24/7 crypto exchanges).
❌ Pure Bitcoin Exposure: No diversification; entirely tied to BTC price movements.
Risks
- Bitcoin Volatility: Prices can swing dramatically within short periods.
- Currency Risk: Underlying assets are unhedged against NZD fluctuations.
- Security Threats: Despite institutional custody, hacking remains a concern.
Alternatives to VIBF
1. Direct Bitcoin Purchase
👉 Buy Bitcoin through platforms like Easy Crypto for 24/7 trading flexibility.
2. Bitcoin Futures ETFs
- Example: ProShares Bitcoin Strategy ETF (BITO) tracks BTC futures (not actual Bitcoin).
- Note: Potential return drag due to futures rollover costs.
3. International Bitcoin ETFs
- Grayscale Bitcoin Trust (GBTC): Holds ~3.5% of global BTC supply (2% management fee).
- Access: Requires platforms like Interactive Brokers for NZ investors.
FAQs
Q: Is this fund a currency purchase or an investment?
A: While Bitcoin is a digital currency, VIBF operates as a speculative investment tied to BTC’s price.
Q: How does NZD volatility affect returns?
A: The fund’s unhedged status means NZD strength may reduce NZD-denominated returns if BTC prices stagnate.
Q: Can I exit during a market crash?
A: Redemptions are processed during market hours only—unlike direct crypto holdings, which allow instant sales.
Media Coverage Highlights
- RNZ: “First NZ-registered fund offering pure Bitcoin exposure.”
- Stuff: “Designed for long-term investors with a decade-plus horizon.”
Final Verdict
- Best For: Investors seeking regulated, tax-efficient Bitcoin exposure without managing wallets.
- Caution: Bitcoin’s extreme volatility makes VIBF unsuitable for risk-averse individuals.
- Consider: Allocate only discretionary funds you can afford to lose.
👉 Explore crypto investment strategies for further insights.
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