Financial managers of hedge funds are expected to change their investment trends in the next few years, including adding cryptocurrencies to their portfolios.
A recent study revealed that these executives are more willing to enter the cryptocurrency market, with one in six expecting to spend 10% or higher.
Hedge funds preparing to enter the crypto space?
Cryptocurrencies have been viewed as a form of investment and speculation for years, but the coronavirus and the actions of the world’s governments are beginning to change this narrative.
Bitcoin, in particular, has become the preferred option for some long-time investors who claim it will help counter inflation.
Although the number of notable names from the traditional financial space openly admitting to buying bitcoin is still relatively low, the trend could shift in the next five years, according to a new study and survey from Intertrust Global.
The study concluded that the vast majority, or 98%, expect their hedge fund to be invested in cryptocurrency within five years.
Nearly 20% of CFOs believe that their organization will allocate at least 10% of all holdings in different cryptocurrencies.
On average, expectations are that about 7.2% will be in cryptocurrencies.
Jonathan White, Global Head of Fund Sales at Intertrust Group commented:
From an investor’s perspective, financial managers have to really make sure they have those controls in place so that investors feel comfortable.
If one in six expects to invest more than 10% in cryptocurrencies, one in six will need to prepare for that investment.
This poll comes shortly after another poll compiled by the Financial Times, which also reached a similar conclusion.
The study stated that hedge funds plan to dedicate more than 7% of their portfolios to cryptocurrencies by 2026.
British financial advisors reverse the findings of this study:
The situation in the United Kingdom is quite different.
A study from “Opinium” reported by “Reuters” stated that more than 90% of British independent financial advisors (IFAs) would never recommend cryptocurrency to clients.
In addition, they will be worried if their clients admit that they have invested in any cryptocurrency due to the volatility of the notorious market and the interest of the regulators.
The UK’s watchdog, the Financial Conduct Authority, has repeatedly identified the potential risks associated with investing in cryptocurrencies in the past.
The country’s central bank governor also warned that investors need to be prepared to lose all their money if it is put into digital currencies.