Vanguard Becomes the Accidental Strategy Whale

Vanguard, the $10 trillion asset manager known in crypto circles for blocking client access to bitcoin ETFs, has emerged as the largest institutional shareholder of Strategy (MSTR), a company whose business model is built around buying and holding bitcoin.

According to Bloomberg, Vanguard now owns more than 20 million shares of MSTR — over 8% of the company — surpassing Capital Group as the top institutional holder. The stake is worth about $9.26 billion.

“God has a sense of humor,” said Bloomberg analyst Eric Balchunas, who has also written The Bolge Effect. “Vanguard chose this life. When you have an index fund, you have to own all the stocks, for better or worse, and that includes stocks that you may not like or approve of personally.”

“Institutional dementia,” said a somewhat less diplomatic Matthew Sigel, head of digital asset research at VanEck. “Indexing into $9 billion of what you openly mock isn’t strategy,” he wrote in a post on X.

Vanguard’s exposure comes from passively managed index funds, not a deliberate bet on bitcoin or Strategy’s strategy. MSTR is included in several of Vanguard’s funds, such as the Total Stock Market Index Fund (VITSX), the Vanguard Extended Market Index Fund (VIEIX) and the Vanguard Growth ETF (VUG).

These funds mirror the composition of broad stock indices and automatically include companies like Strategy when they meet certain criteria.

Strategy, led by executive chairman Michael Saylor, has converted itself into a bitcoin holding vehicle, acquiring more than 600,000 BTC worth now about $72 billion since 2020. The company’s shares have become a proxy for bitcoin exposure, especially in the years before the U.S. approved spot bitcoin ETFs.

Still, Vanguard remains opposed to the asset class. The firm has refused to offer clients access to bitcoin ETFs, even as competitors like BlackRock launched the wildly successful iShares Bitcoin Trust (IBIT), which became the fastest ETF to manage over $80 billion in assets.

Even the arrival of supposedly crypto-friendly CEO Salim Ramji in May last year hasn’t shifted the firm’s position. “I think it’s important for firms to have consistency in terms of what they stand for and the products and services they offer,” Ramji said after his appointment.