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Capricorn Buys Betterment Automated Crypto Investment Platform

Betterment is entering the world of digital assets with the purchase of automated crypto investment platform Capricorn, according to an announcement, after waiting long when its competitors began offering cryptocurrency investment options. The transaction, which will involve “crypto experts” from Capricorn and engineers at Betterment, is expected to close by the end of Q1. In the months following the close of the transaction, Betterment’s retail clients as well as advisors affiliated with the firm will see a new crypto offering.

While intended as a stand-alone product for retail investors, Capricorn is built on algorithmic trading software called Strix Leviathan which was first launched in 2018 and was intended for use by hedge funds. With crypto growing in popularity among retail investors, Strix co-founder Jesse Proudman demerged Capricorn, registering it as an automated investment advisor with the SEC and opening the platform to retail investors in 2020, the firm’s According to the material on the website.

Investors currently using Makra have access to a “basket” of cryptocurrencies that are automatically rebalanced according to the firm’s “sophisticated algorithms”. Baskets range from simple single-coin investments to “Bitcoin” or “Ethereum” baskets, where the entirety of the basket contains a single cryptocurrency, to thematic baskets such as “Universe”, which includes 48 cryptocurrencies with US dollars. Makra currently lists eight baskets on its site, with one around the theme of “metaverse” and another called “inflation hedge”.

Capricorn uses Gemini to hold crypto assets, charging a fee of up to 0.35% per transaction passed on to the final investor. Capricorn, itself, charges an annual advisory fee of 1.0% on all assets under management in multiple assets and actively managed baskets (in addition to custody fees). The charges are debited from the customer’s accounts on a monthly basis. Fees are waived on a single asset basket such as Bitcoin or Ethereum.

Makra has a minimum account of $50.

According to the content provided on Betterment’s site, users of Betterment will not immediately see their portfolios containing crypto. ,Once created, our new crypto portfolio will be offered alongside our existing investment suite,” according to the site. Betterment plans to eventually support crypto portfolios in its app, but currently within the improved app with Makra’s. Does not support sign-up or access.

“Makara will be incorporated into the Betterment and Betterment for Advisors business lines,” said John Mouni, Betterment’s general manager for Advisors. Crypto Portfolio Will Not Be Available to 401(k) Clients, But Firm “Reviews”[ing] their suitability for the future.”

Less than a year ago, Betterment was still in the “early innings” of evaluating its crypto strategy. But with Tuesday’s announcement, the firm is drowning in what it refers to as a “simple, expert-managed crypto portfolio and education for investors ranging from crypto curious to crypto sophistication.”

Unlike competing Wealthfront, which caps individual portfolios at no more than 15% allocation to crypto, according to Mouni, Betterment “does not plan to impose hard limits on what percentage of a client’s portfolio can be allocated to crypto.” Is.” “However, we will provide guidance and advice regarding concentration risk and diversification.”

“Crypto is here to stay,” Betterment CEO Sarah Levy announced in a statement. “Makara is unique in offering consumers a managed crypto portfolio combined with the guidance and ease of use that has defined betterment. Makara is to crypto today what we are to traditional investing – the pioneering robo from a decade ago. – Since the investment.”

Betterment is not the first automated investment platform to undergo major changes in 2022.

Late last month, Wealthfront backtracked from a more than a decade-old promise: that it would remain a software-only investment platform. With its sale to UBS for $1.4 billion, Wealthfront will eventually serve as the digital gateway for UBS’ remote human advisors.

Makra co-founder and CEO Jesse Proudman expects the acquisition to help Makra grow.Both retail investors and financial advisors,” according to a statement.

Last year Levy promised a greater focus on Betterment’s advisory business, as he laid out his vision for the firm after taking over the CEO duties from co-founder John Stein in late 2020. Months later, Betterment raised $160 million in capital, including one. A $100 million credit facility and $60 million in a Series F equity round, with funds earmarked for the expansion of the firm’s business-to-business units.

Makar will continue to operate as an independent offering and brand after the deal closes. Terms were not disclosed.

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