The crypto pace has been thriving on speculations, conjectures and rumours ever since its inception, and it seems that the latest one about the investment industry doing the rounds on the rumour mill is that pension funds are buying crypto. The question now is, whether a multi million dollar pension fund is finally prepared to make inroads into the world of cryptocurrency and what it’s subsequent impact will be.
The largest 300 pension funds currently control over 6 trillion USD in assets and it is highly unlikely that pension funds will soon be investing in crypto. A plausible reason as to why this might not be the best idea is that the funds will be subject to heavier saver or investor protection regulations. Pension funds have humongous amounts of cash to invest and are probably the largest investors in listed and private companies. Primary asset classes which are utilized for the investment of pension funds is equities, property, bonds and cash. Crypto is still victim to tremendous volatility and is not regulated enough for the likes of a pension fund. That is all starting to change however.
A portfolio manager at First National Fund Advisors, Chuck Lauber, explained that pension funds in the U.S. are public entities, and as such “they’re mired in red tape which results in most of them being ‘late to the game’ in the realm of investment opportunity.”
However, that being said, some of the pension funds are making great inroads into smart invest in emerging assets classes, and crypto most certainly falls into that category. Lauber also said:
“Most [pension funds] unfortunately, are not. Pro: ‘new’ asset class could help lower overall correlations. Con: lack of knowledge and reach for yield makes PFs the potential bag holders.”