Booming Bitcoin Muscles Into an Old-School Investment Club

Stodgy equity mutual funds have been bleeding cash for years, losing out to cheaper and often better-performing alternatives. But a niche subset are now finding an unlikely lifeline from a next-generation booster: Bitcoin.

The digital token’s 100% surge over the past year appears to have given a handful of fund portfolios in the $9 trillion actively managed sector a lift. Of the 10 funds invested in Bitcoin via exchange-traded funds, seven have beat their benchmarks by an eye-popping average of 22 percentage points in the 12-month period through July. And while stock picking also played a hefty role in ...