GDLC - GDLC And Its Elusive NAV Discount: What Investors Need To Know
2024-07-18 09:41:34 ET
Summary
- Grayscale Digital Large Cap Fund ETF trades at a significant discount to its NAV, primarily due to its closed-end fund structure lacking an arbitrage mechanism.
- I believe the inclusion of cryptocurrencies like XRP and AVAX makes an ETF conversion unlikely, reducing chances of closing the NAV discount (barring exotic trades).
- The high expense ratio and concentrated holdings in BTC and ETH make the GDLC closed-end fund less appealing compared to direct investments in these assets or low-cost ETFs.
- My recommendation is to hold GDLC if already in your portfolio, betting on a potential ETF conversion. New investors should opt for crypto ETFs instead, in my view.
Thesis: GDLC is unlikely to be converted into an ETF, reducing the chances of cashing out its NAV discount
The Grayscale Digital Large Cap Fund ETF ( GDLC ) is trading at more than a 30% discount against the crypto assets it holds at the time of writing. This is a similar behavior to what the Grayscale Bitcoin Trust ETF ( GBTC ) exhibited before its conversion to an ETF earlier this year....
GDLC And Its Elusive NAV Discount: What Investors Need To Know