These “Mag 7” stocks represent a single portfolio holdings that account for a comparatively large share of portfolio risk as with Bitcoin.
Investors should allocate about 1% to 2% of their portfolio into Bitcoin, according to BlackRock Investment Institute (BII), which uses a risk budgeting approach by sizing the allocation based on how much it would contribute to total portfolio risk.
“Bitcoin cannot be compared to traditional assets,” says BII’s analysts. However, from a portfolio construction perspective, the “Magnificent 7” group of mega cap technology stocks is a useful starting point in helping to think about Bitcoin allocation, they say.
