$2.2T Fixed-Income Giant, Pimco, is Already Trading Crypto, Now Plans to Invest in Certain Assets & Understand DeFi
“We’ll take baby steps in an area that’s rapidly growing,” said Pimco CIO Daniel Ivascyn.
Pimco, the asset manager giant with $2.2 trillion in assets under management, has been dabbling in cryptocurrency for some time and now plans to gradually invest more in crypto assets.
“Now we’re looking at potentially trading certain cryptocurrencies as part of our trend-following strategies or quant-oriented strategies, then doing more work on the fundamental side,” said chief investment officer Daniel Ivascyn in an interview with CNBC.
“So this will be a gradual process where we spent a lot of time on the internal diligence side speaking to investors. And we’ll take baby steps in an area that’s rapidly growing.”
Some of the company’s hedge fund portfolios are already trading crypto-linked securities, he said.
“We’re trading from a relative value perspective. So we’re not taking directional exposure, but we’re looking to take advantage of mispricings between the cash product, popular trust that trades on the exchange, and then the futures.”
“So that was a starting point for us in a very narrow segment of our business.”
Pimco is also taking an interest in decentralized finance (DeFi), which one has to understand because “it will be disruptive…in our business in particular,” Ivascyn said.
The firm is currently working on scenarios where it could provide them with a competitive edge “in a rapidly changing environment that offers a pretty significant value proposition,” particularly for younger generations — the new generation of the investment community.
Unlike Pimco, hedge fund manager David Einhorn finds cryptocurrencies “very complicated” as such; he hasn’t chosen to invest in them.
Greenlight’s Einhorn prefers gold as an inflation hedge, in contrast to billionaire investor Paul Tudor Jones, but said,
“I'm not negative on [cryptocurrencies]. … They may continue to do extremely well. I just haven't chosen to invest in them.”
Earlier this month, he had put crypto in a “too hard” bucket because it was unregulated and unlimited. “I don't have a strong view that this is some enormous waste or this is some phenomenal opportunity. I think it's too difficult,” he said at the time.
In his interview this week with CNBC, Einhorn said that the Federal Reserve “doesn't have the stomach to fight inflation” because policymakers are afraid to trigger a market correction or a recession. This means, “they are really left with bad choices.”