According to a new report by Fidelity Investments, one of the largest asset managers in the world, 22 per cent of institutional investors already has exposure to digital assets.
The survey polled 441 institutional investors between November last year and February this year, which was a time when cryptos hit their lowest levels. The survey revealed that 47 per cent of institutional investors view digital assets as “having a place in their portfolios” and also disclosed their preferred investment methodology – 72 per cent prefer to invest in digital assets through customized investment products; 57 per cent prefer to invest directly, and another 57 per cent revealing they prefer to buy an investment product that has digital asset companies.
Tom Jessop, president of Fidelity’s digital assets division, revealed that cryptos have evolved from their humble beginnings.
We’ve seen a maturation of interest in digital assets from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments
The investors also have different perceptions of digital assets, with 47 per cent viewing cryptos as an attractive technology while 46 per cent are attracted to the low correlation that digital assets have with other assets.
Jessop explains the challenges that investors share with the rise of interest in digital assets :
“Institutions are doing the work to develop their own investment theses—but there’s more work to be done as it relates to describing digital assets and blockchain technology in terms that are familiar to them. For example, price volatility, which was a primary concern of survey respondents, may dampen as the underlying custody, trading and financing infrastructure continues to develop in a direction that traditional market participants are familiar with.”
Other than Jessop, Abigail Johnson, CEO of Fidelity, has been one of the biggest crypto supporters on Wall Street, and she believes that Wall Street’s confidence in Fidelity will play an important role in crypto adoption. The survey shows that 37 per cent of institutions prefers investing in digital assets with a traditional financial firm as opposed to 24 per cent who prefer a crypto-focused firm.
Jessop points out that Fidelity Digital Assets has garnered interest from a number of giant Wall Street firms and many of them are approaching it from a different perspective – whether it’s asset allocation or looking at the fundamentals like network activity, a more quantitative approach.