News reaching us is that some US East Coast universities are stretching the Investment and Usage Policies of their Endowment Funds by making investments in “risky” cryptocurrencies.
While we cannot pinpoint which specific cryptos their funds rests at or universities they represent, John Lore, a lawyer and owner of the Capital Fund Law Group said portfolio managers of these Endowment Funds are finding cryptocurrency yields irresistible. John Lore’s firm specializes in providing legal advice to hedge funds.
For perspective and perhaps to quantify the scale of what this means then you should realize that Endowment Funds from leading US universities have more than $120 billion under their belt. And that’s according to 2014 statistics. Of course with partnerships with blockchain start-ups we shall see this figure increase exponentially in the coming days.
This shift of investment is surely a sign of how portfolio managers are retracting their views on cryptocurrencies. Then again, this could also mean younger managers are beginning to occupy decision making seats in their respective firms.
What Are Endowment Funds?
Endowment Funds are basically investment vehicles which foundations as churches, universities and NGO use to make periodic withdrawal of their invested capital. More often than not, these capitals are made up of donations and the capital gains of these investments sustain the operations of these foundations.
It’s simple as that and better still, the regulations governing how these monies are used or invested are leaner than those overseeing Pension Fund investment.
Nature Of Cryptos A Trigger For Investment
While this is a welcomed addition especially from cryptocurrency enthusiasts and general observers, John Lore notes that only a small percentage of their funds have been channeled to cryptos for “strategic reasons”. The rationale is simple. Cryptocurrency coins and tokens are generally in limited supply and should these university Endowment Fund managers sees a reason to diversify or even secure part of these tokens then it could truly be strategic.
After all, we are seeing mature blockchain and cryptocurrency companies as Ripple and EOSIO sinking their money to universities urging tutors to develop on-demand blockchain curriculums for their students.
One such beneficiary is the University College London (UCL) where Dr Paolo Tasca leads the university’s Center for Blockchain technology. She said:
“To improve technology literacy and drive the adoption and integration of blockchain into a range of business processes, we are dedicated to groundbreaking scientific research and teaching in this field.”
Undoubtedly, blockchain companies are likely to continue supporting learning institutions through initiatives and donations which will instead increase their respective endowment fund kitties. If managers instead diversify their investment holdings towards cryptos then the circle would be complete.