First UK pension fund invests in bitcoin
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An unnamed UK pension scheme made an investment in bitcoin in October, in what adviser Cartwright has called “the first of its kind in the UK”.
The investment was made “after a rigorous training and due diligence process”, according to Cartwright, and resulted in trustees making a 3% allocation, which the adviser said reflects the scheme’s relatively long investment time horizon.
Sam Roberts, director of investment consulting at Cartwright, said: “This bitcoin allocation is a strategic move that not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.”
Integrating bitcoin into a pension scheme’s investment strategy is "a bold step that reflects the forward-thinking nature of the trustees involved”, said Roberts, who hopes this will start a trend for institutional investors in the UK “to catch up with their increasing number of peers and competitors around the world who are already taking advantage of bitcoin’s unique attributes”.
Bitcoin is used as a hedge against monetary debasement and counterparty risk, diversification, and a way to access a rare long-term asymmetric growth opportunity, according to the firm, which expects an institutional adoption curve similar to when pension schemes started investing in equities in the 1970s, high yield bonds in the 1980s, or liability-driven investments in the 2010s.
Steve Robinson, who heads up investment implementation at Cartwright, said the operational procedures around this bitcoin investment have been “designed to maximise the security of the asset whilst allowing profits to be taken quickly as and when they arise”.
The solution created has a low minimum investment threshold, meaning it is available to pension schemes of all sizes, he added.
Pension funds in the US are among the keenest adopters of crypto since the Securities and Exchange Commission approved the first crypto ETFs in January this year. In July, the State of Michigan Retirement System reportedly invested $6.6m (£5.1m) in a bitcoin ETF.
Florida’s chief financial officer Jimmy Patronis recently wrote to the State Board of Administration to ask it to consider adding cryptocurrencies to the state pension fund’s portfolio. Patronis cited former US president Donald Trump, a candidate in Tuesday’s elections, as having proposed a national stockpile of cryptocurrency to make the US the world's cryptocurrency leader. The Financial Times reported last month that Trump and his three sons have been promoting a crypto venture set up by Trump’s business partners among others.
Florida’s chief financial officer Jimmy Patronis recently wrote to the State Board of Administration to ask it to consider adding cryptocurrencies to the state pension fund’s portfolio. Patronis cited former US president Donald Trump, a candidate in Tuesday’s elections, as having proposed a national stockpile of cryptocurrency to make the US the world's cryptocurrency leader. The Financial Times reported last month that Trump and his three sons have been promoting a crypto venture set up by Trump’s business partners among others.
