Digital currency-backed exchange-traded funds (ETFs) are likely to start appearing in “model portfolios” by late 2024, says BlackRock’s head of ETFs and Index Investments.

In an interview with Bloomberg on July 29, BlackRock’s head of ETF and Index Investments, Samara Cohen, answered questions about how major financial institutions like Morgan Stanley, Wells Fargo, and UBS are doing regarding crypto ETFs and their processes for introducing these funds.

Cohen stated that major financial institutions are currently conducting risk analyzes and detailed reviews and looking at the roles of Bitcoin and Ether in their portfolios.

“Later in the year and into next year, we will see allocations to model portfolios, which will give us more insight into how investors are using these funds,” Cohen said.

Model portfolios offered by large, full-service brokerages generally take a diversified investment approach and aim for a balance of risk and return based on a transparent strategy.

Model portfolios can be considered pre-designed investment strategies that can function like ready-made templates or “recipes” for investing.

BlackRock expects the size of model portfolio management to grow from $4.2 trillion currently to $10 trillion in the next five years.

“This is going to be a big thing,” Salim Ramji, BlackRock’s global head of iShares and index investments, said in July. “This is the way more and more fiduciary advisors do business, and therefore the way we do business with them.”

Cohen added that Bitcoin and Ether are two very different asset classes with different uses, but they are useful as portfolio diversifiers. When commenting on the net outflows from Ether spot ETFs, Cohen noted that this was a strong launch and provided an “access point” for investors seeking ETH in their portfolios.

Stating that there have been many exits from high-priced funds and possibly Grayscale Ethereum Trust, Cohen said, “Investors want to gain ETH exposure, especially if they will use it within the framework of their overall portfolio in an ecosystem they trust.”

Grayscale Ethereum Trust has lost $1.7 billion since its spot ETF conversion, and that includes the latest outflow of $210 million on July 29. However, around 10% of this amount moved to the zero-fee Ethereum Mini Trust.

Ether spot ETFs have experienced four consecutive days of outflows and only one day of inflows since launch on July 23, data from Farside Investors.

Cohen also confirmed that spot ETFs for alternative cryptocurrencies like Solana are unlikely to emerge in the short term. “I don’t think we’ll see a long list of crypto ETFs,” Robert Mitchnick, BlackRock’s head of digital assets, said at the Bitcoin 2024 conference.