Twenty-four percent of alternative investors also see bitcoin as an investment. The most relevant hedge funds are among the most willing to invest in bitcoin.
An investigation led by the accounting firm Ernst & Young revealed that 31% of hedge fund managers have planned to invest in bitcoin (BTC) and other cryptocurrencies. Hedge funds are alternative or high-risk investment vehicles in which managers make investment decisions with fewer legal constraints.
The report based on alternative investments that appeared this Monday, November 22, indicated that 24% of alternative investors and 13% of private equity funds contemplate the inclusion of cryptocurrencies in their current portfolios (individual or of their companies) in a period of between one and two years.
According to the study, the investment managers of the most relevant funds, those with assets under management above USD 10 billion, and investors managing funds between USD 2 billion and USD 10 billion are the ones who would show the most willingness to incorporate cryptocurrencies into their plans.
Cryptocurrencies May Need More Receptivity
Regarding alternative investments, investors that intend to stocks bonds in alternative paths such as artworks are also accountable. But assets like cryptocurrencies still have a long way to walk when it comes to greater receptivity.
Although these are assets that generally have little correlation with traditional currencies and attractive returns, only 7% of the fund managers interviewed by Ernst & Young claimed to have small percentages of cryptocurrencies in their portfolios.
At least 78% of the consulted fund managers and investors who have no investment in cryptocurrencies highlight that the main reason for discarding these currencies is that they do not fit into their investment plans and strategies.
Other reasons cited for not venturing into bitcoin or other cryptocurrencies as an alternative investment vehicle are high volatility, regulatory uncertainty, and little understanding of this type of asset.
There are, however, many experts that studied in detail the impact the inclusion of bitcoin and other cryptocurrencies might cause in traditional portfolios. Among the most frequent results, the studies suggest that small percentages of bitcoin show an exponential improvement in the returns of said portfolios.
Bitcoin Is an Asset that Improves the Return on Investment Portfolios
A study by Fidelity Digital Assets revealed that alternative investments show at least 12% of global investment markets and totaled some USD 13.4 billion in 2018.
On the other hand, the Fidelity study stated that bitcoin is an uncorrelated asset that could be useful in improving the risk-adjusted returns of traditional asset portfolios.
The research also simulated at least four scenarios between 2015 and 2020: a traditional portfolio with 60% stocks and 40% bonds and three portfolios that included 1%, 2%, and 3% bitcoin, compared with the annualized return of 6.83% of the portfolio without bitcoin, the remaining three acquired returns of 7.98%, 9.11%, and 10.24%.
By Jenson Nuñez
