Bitcoin is becoming an easier and easier sell to large institutional investors
Several years ago, most pension funds, endowments, and family offices laughed at someone saying they should invest in bitcoin.
Today, not so much.
At this point an investment in bitcoin is more than just a hedge, it's an investment in technology and innovation which makes it even more attractive.
An investment with asymmetrical return possibilities...
The numbers just make sense...
Mark Yusko of Morgan Creek Capital pulled the data from endowments and foundations from 5 years ago and it's pretty interesting to say the least...
According to Yusko's figures, endowments and foundations totaled roughly $670 billion in investments.
Taking just 1% of those holdings would equal $6.7 billion worth of investment.
If they had put that 1% in bitcoin they would have made 9.2% instead of the 7.2% they generated.
"If you took 1% of all the endowments and foundations five years ago, that would have been $6.7 billion out of $670 billion. You took that one percent — half percent from stocks, half from bonds — instead of making 7.2%, which is what they made, they would have made 9.2% or 200 basis points better. Two on 7.2% is a lot of alpha.”
(Source: https://cointelegraph.com/news/1-bitcoin-no-longer-crazy-for-portfolios-says-morgan-creek-ceo)
That means, just a 1% exposure to bitcoin would have increased the entire portfolio returns by 2%!
That is huge!
(Source: https://blockchainjournal.news/a-major-institutional-investor-plans-to-buy-25-of-all-bitcoins/)
Bitcoin's asymmetrical returns make all the difference...
Due to the asymmetrical return possibility of bitcoin, it more than makes up for risk associated with the non-zero probability that bitcoin eventually goes to zero.
Thus, having at least a 1% exposure to bitcoin can add serious alpha to a portfolio without moving the needle much in terms of overall portfolio risk.
Funds are starting to realize this and are starting to make their way into bitcoin.
Over the next decade, Yusko thinks it will be crazy for these funds not to have had exposure to bitcoin...
“So the idea that ten years from now we won’t look back and say that as a fiduciary of a pension fund, sovereign wealth, family office, etc. you had to have exposure to this asset, is crazy.”
(Source: https://cointelegraph.com/news/1-bitcoin-no-longer-crazy-for-portfolios-says-morgan-creek-ceo)
Plus, I am sure no one wants to be known as the one fund that didn't have exposure to the best performing asset of the past decade...
Peer pressure can be a powerful force!
Stay informed my friends.
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-Doc