One of Australia’s biggest pension funds has admitted it is looking to invest in the cryptocurrency sector, in another sign that retirement vehicles are taking bitcoin and cryptocurrencies seriously.
Speaking to the Financial Times, Queensland Investment Corporation (QIC), which is the fifth largest pension fund in the country managing A$92.4 billion in assets, said that it had until recently declined to take the crypto plunge. Inflows into the space are likely to be “more a trickle than a flood”, according to Stuart Simmons, QIC’s head of currencies, due to uncertainty about how government watchdogs will react on the fast growing crypto economy.
While the risk curve for crypto investors isn’t considered that steep any more, conservative pension fund managers see a move into crypto as a major departure from conventional asset allocation strategies. So far, they have stayed out of the game, missing out on over 200% increase since Bitcoin broke the old all time high of $20,000.
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Per the FT report, two pension funds in Virginia have purchases crypto assets, while Canada’s second-largest pension fund has co-led a $400 million funding round for crypto lending platform Celsius Network (which is also partnered with crypto exchange Bitfinex).
Simmons went on to say that, despite the decade long-bull market in the industry, the manager doesn’t see the crypto future as ‘inevitable’.
I don’t think there’s an inevitability about super funds and the institutional market investing in crypto, but as the segment matures . . . there’s a likelihood that super funds seek out exposure.
Regardless, crypto markets have exploded in size, with the pioneering cryptocurrency – bitcoin – reaching a $1 trillion valuation twice this year. Industry flows haven’t gone back into traditional finance either, with yield-bearing financial products offering investors a risk on/off ramp and plenty of reasons to stay.
Of course, not all the funds are convinced about the industry. Andrew Fisher, the head of asset allocation at Sunsuper, another Queensland based pension fund manager with A$85bn of assets under management, said it is interested in the technology underlying cryptocurrencies but bitcoin and other coins are “not an area of interest or focus”.
Perhaps Sunsuper will feel more confident once bitcoin valuations reach 6-figures. In that case crypto investors won’t complain should pension funds provide liquidity at the $500,000 pit stop price-point in the years ahead. The question is: will crypto investors even consider parting with their hard earned digitally immutable assets at that point
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