Quote from: wachtwoord on September 26, 2013, 08:31:17 PM

Quote from: BTC4Victory on September 26, 2013, 07:43:16 PM

(*Well, constant, except for the slow erosion over time as BTC are sold to pay the rather-steep 2% annual maintenance fee.)

Rather steep? I consider any fee above 0.1% for an ETF to be very high and I really don't understand that people buy these. With this ETF there is even an added fee for investing AND divesting.

The "added fee" for investing or divesting is just for people who are creating of redeeming baskets; anyone else will just pay a trade commission; I don't know what Second Market's commission structure is, but once BIT moves to public markets, then you'll just looking at the same commissions as you'd pay for a stock trade;

0.1% ETF fees are fine for multi-billion dollar ETF's; but A) for starters, the market cap of this is miniscule; it needs to earn enough fees for the sponsor so that it's filings can be paid for, etc; maybe the expenses will decline as the size gets larger?

Additionally, with this and the Winklevoss ETF, fees will be one of the few differentiators for them to compete on.

Lastly; 2% isn't an absurd fee in the investment world; yes, for anyone already involved in Bitcoin, a 2% fee for having someone else hold your bitcoins might seem steep, but this ETF isn't catering to you. In addition, lots of people are paying fees like that already (US citizens wiring funds to MtGox are certainly paying $30+ each way for their international wire; supposing $60/round trip, any purchase of less than $3000 worth of coins is paying more than 2% for the purchase, PLUS gox's trading commissions, etc.

So even though i said this isnt' meant to cater to people already involved in Bitcoin, it could turn out to be a cheaper alternative for people who want to have an asset that rises in price when/if BTC goes up, and are willing to live with the risk that a heavily regulated company will be holding their coins for them (SecondMarket is already far more regulated than the majority of places that bitcoiner's have stashed their coins over the last few years).

So, all that said. I dont' see this as being bad or absurd or anything else. Sure the fee looks extreme compared to most other ETF's. But considering the size of this fund, the fees Secondmarket will incur, and the fact that most market participants will not object to their charging that size fee considering what a nonstandard asset Bitcoin is, its not by any means a deal breaker.

Heck, if Secondmarket is holding the liability bag if coins from their ETF get stolen, I would be more confident holding BTC's in the form of their ETF in a brokerage account (once it becomes salable to the general public) than any online wallet service.