Vanguard abstained from this as well, Rekenthaler noted, “on the grounds that customers did not always know what was bad for them. The company has also on occasion warned investors away from its most popular funds. One prominent example was Vanguard Growth Index (VIGRX). In the late 1990s, investors who inquired about that fund received cautionary letters along with the fund’s prospectus,” he said.
While some may argue that “bitcoin is a different animal than Vanguard’s previous abstentions,” Rekenthaler said, calling the coin “digital gold” does not make it so.
“Physical gold broke even during 2022's financials-market meltdown, while bitcoin’s price collapsed,” Rekenthaler said.
At the end of the day, Vanguard is sticking by its knitting. In the firm’s “judgment, cryptocurrency is currently unsuitable for its clients. In the future, that may change. But its ruling is for the here and now,” he added.
"I would not buy cryptocurrencies myself, as they are speculations rather than investments. (If an asset cannot generate cash, under any circumstance, then there’s no reason to hold it except for the hope to sell to a higher bidder). But I do not begrudge others doing so,” Rekenthaler said.
While Vanguard founder Jack Bogle famously said, “Avoid bitcoin like the plague,” the firm’s mindset to do the right thing by investors is what’s important, Rekenthaler argued.
“Vanguard became the world’s largest fund company partly because its management knew when to say no. That it remains willing to do so is a positive sign for the company’s financial health—and for those of its clients,” he concluded.