A New Zealand wealth management firm has thrown its weight behind cryptocurrencies, allocating five per cent of its $350 million KiwiSaver retirement scheme assets to Bitcoin.
NZ Funds made the bold move late last year, joining a growing number of institutional investors putting their money into digital assets.
According to NZ Funds Chief Investment Officer James Grigor, this is just the start. He says the company plans to make a series of further Bitcoin investments over the next five years.
Gold and Bitcoin share key benefits
Mr Grigor told New Zealand news agency Stuff that he sees striking overlaps between gold, a proven heavyweight asset, and relative newcomer Bitcoin.
He claims that, like gold, Bitcoin is an attractive alternative commodity in uncertain times, as well as a good store of value. While NZ Funds’ KiwiSaver Growth Strategy scheme is built on traditional asset classes like bonds and shares, other opportunities continue to arise, over time—like Bitcoin.
His positive endorsement of Bitcoin follows that of top hedge fund manager Ray Dalio of Bridgewater Associates. Back in December 2020, Mr Dalio also likened Bitcoin to gold, recommending it as a great way to diversify portfolios.
Sitting alongside conventional stocks and commodities, cryptocurrencies can offer fund holders genuine flexibility and breadth. Not enough people diversify their investments, he says.
Company adopts Bitcoin—right asset, right time
As reported by Stuff, the KiwiSaver Growth Strategy scheme made its first Bitcoin purchase in October 2020, when the biggest global cryptocurrency was trading at about $US10,000.
It was a timely investment, with Bitcoin reaching an all-time high of $US61,000 in early March this year. Bitcoin was still sitting at close to $US55,773 on March 29, according to Coindesk.
Pension funds in crypto catchup
As reported by the Sydney Morning Herald in December 2020, Australian fund managers generally still struggle to see Bitcoin as a legitimate long-term asset, despite its soaring price and popularity. Super funds have lagged behind other institutions in the adoption of digital assets, put off by the volatility of cryptocurrency markets.
In the US, however, pension funds are actively investing in cryptocurrency. Grayscale notes something of a bitcoin frenzy, as retirement funds and endowments act quickly for fear of missing out.
Is it only a matter of time before Australia gets FOMO and catches up?