Hedge fund executives plan to significantly boost crypto holdings in the coming five years, according to a recent survey by global fund administrator Intertrust.
Crypto allocations are expected to reach 7.2 percent in five years’ time, according to the survey first reported by «Financial Times» (behind paywall).
Based on alternatives data platform Preqin’s forecast for the hedge fund industry, this could total $312 billion.
High Penetration
While levels of interest vary, the survey notes that all the executives surveyed in North America, Europe and the U.K. expect to have at least 1 percent of their portfolios invested in crypto.
North American funds expect to have exposure of 10.6 percent on average, while those in Europe and U.K. expect 6.8 percent on average.
Intertrust’s survey is based on responses from 100 chief financial officers at hedge funds with an average of $7.2 billion in assets under management.
Hedge Fund Approach
Despite continued regulatory pressure and market volatility, investor demand continues to grow across various segments.
Within hedge funds, investors have increasingly used bitcoin, for example, as a hedge against falling real yields and quantitive easing as well as an alternative to declining equity dividend yield, according to Jean-Baptiste Berthon in an essay published on finews.first earlier this year.
«Hedge fund styles include discretionary and quantitative approaches,» Berthon explained. «As the market gains depth, attracts new experienced investors and has an improving information flow, the alpha potential will likely moderate over the coming months and years. Yet, the market remains highly inefficient, and significant digital asset price dispersion provides room for arbitrage.»
