Mark W. Yusko, one of the founders of Morgan Creek Digital, has recently affirmed that private pension fund managers could “dip their toes” in BTC in order to gain more money. Is that a good idea? The economist believes that it is.
Private pension funds are seeing some of their main losses since the 1950s, which means that this is far from being a good time for them. Reports indicate that they are having the worst quarter than they had since 2008 when we saw the great last recession.
Pensions have precisely wrong Asset Allocation at precisely wrong time (again…)
things will get truly ugly wrt to funding levels & ability to honor commitments when valuations mean revert…
— Mark W. Yusko (@MarkYusko) April 8, 2019
Mark W. Yusko, however, thinks that they may benefit from using Bitcoin. He said that they invested badly recently and that Bitcoin, which is increasing in price recently, can become one of the better investments. These funds often have a lot of money, so they will not lose much of their assets even if the bear market continues.
Anthony Pompliano agrees with this idea. He recently affirmed that most pension funds were too concentrated in having equities right now. The largest pension fund of the world, Japan’s Government Pension Investment Fund, for instance, has over 50% of its assets in equities.
Since equities are not having a good time right now, the fund had a huge 9% loss this quarter. Betting too hard on this kind of investment has led the fund to lose money, so why not start investing in Bitcoin?
Allocating 1% in Bitcoin Would Have Major Results
These pension funds have so much money that they could invest in Bitcoin without any risk at all. For instance, the Japanese fund lost 9% in three months. If they invested 1% in Bitcoin, they would have lost only 0.8% last year and this is if they bought it when the prices were at its peak.
Crypto funds have a low correlation with the traditional markets, so even in times when the market is not going well, you can have a small number of investments in crypto assets that will balance the losses. Pompliano has affirmed that even a 1% allocation could negate many losses during an equity market fall.
However, despite these claims, it should be noted that the crypto market fared very bad together with the equities and stocks markets last year. During the last quarter of the year, there was a strong correlation between the two markets, so further analysis is needed at this time.
In any case, some funds are finally starting to invest in cryptos and this can be a positive change for them even if these funds only invest a very small portion of their assets in the market.