Institutional engagement is here … institutional investors are overwhelmingly favorable about the appealing characteristics of digital assets. Nearly seven in ten respondents cited certain characteristics of digital assets as appealing.
The survey finds 47% of respondents “appreciate that digital assets are an innovative technology play” while 46% are attracted to their low correlation to other assets. Meanwhile, 27% like their high upside potential and 25% favor their decentralization aspect. Among respondents, financial advisors (74%) and family offices (80%) view the characteristics of digital assets most favorably.
The survey was conducted between Nov. 26 last year and Feb. 8 by Greenwich Associates on behalf of the Fidelity Center for Applied Technology. Participants were 441 U.S. institutional investors, including pensions, family offices, crypto and traditional hedge funds, financial advisors, endowments and foundations.
Fidelity Investments is one of the world’s largest financial services providers. The company claims to have more than $7.3 trillion in client assets under administration. Its subsidiary, Fidelity Digital Assets, offers a platform for securing, trading and supporting digital assets.
Fidelity’s study shows that “Institutional investors are finding appeal in digital assets and many are looking to invest more in digital assets over the next five years,” elaborating:
About 22% of institutional investors already have some exposure to digital assets, with most investments having been made within the past three years … Four in ten respondents say they are open to future investments in digital assets over the next five years.
Out of all respondents, 47% view digital assets as having a place in their investment portfolios. 32% see them as part of an alternative asset class, while 15% believe they have their own independent asset class. Among the 47%, 72% would buy investment products that hold digital assets, 57% would buy crypto assets directly, and 57% would buy investment products that hold crypto companies.
“We’ve seen a maturation of interest in digital assets from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments,” Tom Jessop, President of Fidelity Digital Assets, detailed. “More institutional investors are engaging with digital assets, either directly or through service providers.” The survey also noted:
Among the obstacles to digital asset investments cited by respondents were price volatility, lack of clarity around regulation, the limited track record and lack of fundamentals.
A report by Morgan Stanley published in October last year reveals a growing number of crypto funds and crypto assets under management. According to Cryptofundresearch, an estimated 220 crypto funds were created last year and crypto assets under management amounted to approximately $7.11 billion in July.
In addition, according to a survey of 150 endowments conducted by Global Custodian, The Trade Crypto and Bitgo in the fourth quarter of last year, 94% stated that they invested in crypto assets either directly or through a fund. Jonathan Watkins, Managing Editor of Global Custodian and The Trade Crypto, commented:
Despite the widely-publicised concerns around regulation, custody and liquidity, endowments have been factoring crypto-related investments into their allocations, and very few are showing intentions of stepping away.
Do you think institutional investors should hold cryptocurrencies in their portfolios? Let us know in the comments section below.
Images courtesy of Shutterstock and Morgan Stanley.
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