Fund manager 3iQ seems intent on holding onto the fee stream from its Bitcoin closed-end fund as long as it can. Unlike CI Financial which merged its closed-end Bitcoin fund with its Bitcoin ETF, 3iQ dumped this press release on Friday afternoon.
TORONTO, May 14, 2021 – 3iQ Corp. (“3iQ”), the largest digital asset manager in Canada, is pleased to announce that holders of units of The Bitcoin Fund (TSX: QBTC, QBTC.U) will have the voluntary option to convert all or part of their units into units of the 3iQ CoinShares Bitcoin ETF (TSX: BTCQ, BTCQ.U).
This conversion will be effected on a relative net asset value basis (NAV-for-NAV), and will be available as an additional option to unitholders of The Bitcoin Fund in connection with the upcoming annual redemption of this Fund.
With this option, unitholders of The Bitcoin Fund will have three available options to receive redemption proceeds: in cash, in-kind (subject to meeting certain minimum deposit thresholds), and the voluntary conversion on a NAV basis to units of the 3iQ CoinShares Bitcoin ETF.
Of course if you want to take advantage of this feature, you only have 10 business days to contact your broker before the redemption window closes. It’s almost like they filed the press release to give the minimal notice required in the hopes unit holders don’t notice it or act on it.
Given the MER difference (1.95% vs 1% for the ETF) this seems like an obvious conversion if you hold anything QBTC in a registered account. There are tax considerations to taking cash or shares in a non-registered account for long-term unit holders. Clipping the arbitrage spread of 1.5% hardly seems worth it unless you’re putting the trade on in size – but it is free money and doesn’t necessarily require a short to hedge out the position if you want to be long Bitcoin anyway.
