Institutional Investors Are ‘Open’ to Adding Crypto to Their Portfolios

Just under a quarter of allocators and asset managers said they already had exposure to digital assets in a Fidelity Investments survey.

Illustration by II

Illustration by II

Forty-seven percent of U.S. institutional investors think digital assets have a place within their portfolios, according to a survey released Thursday by Fidelity Investments.

The survey — which was conducted by Greenwich Associates and included more than 400 pensions, family offices, hedge funds, financial advisors, endowments, and foundations — found that about 22 percent currently have some exposure to digital assets. Forty percent said they were open to making crypto investments over the next five years.

“We’ve seen a maturation of interest from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments,” said Fidelity executive Tom Jessop in a statement. Jessop is the president of Fidelity Digital Assets, Fidelity’s recently launched platform for trading digital assets such as Bitcoin.

[II Deep Dive: One-in-Ten Allocators Plan to Invest in Crypto This Year]

Institutional investors’ preferred method of accessing crypto investments in the future will be through their asset managers, with 72 percent saying that they would like to buy investment products that hold digital assets, according to the survey. Some 57 percent said they would like to buy crypto assets directly. Another 57 percent said they would buy an investment product that holds digital asset companies.

“More institutional investors are engaging with digital assets, either directly or through service providers, as the potential impact of blockchain technology on financial markets — new and old — becomes more readily apparent,” Jessop added.

One of the main appeals of digital assets, according to 46 percent of the survey’s respondents, is their low correlation to other assets. In addition, 47 percent of respondents said that they believed digital assets were an “innovative technology play.”

Respondents also cited a number of obstacles preventing investments in digital assets, however, including price volatility, the lack of clarity around regulation, digital assets’ limited track record, and the lack of fundamentals.