5. Most advisors we talk to are skeptical about the area, though some think clients might want to have 1 percent of their assets in crypto currencies in case they are wrong. What’s your read on advisors’ take on the space?
Here’s what we know about financial advisors and crypto. We know, first and foremost, that advisors’ customers are asking about crypto. Surveys suggest that well over half of all financial advisors have had clients ask questions about crypto. That means that every financial advisor, whether they want to allocate to the space or not, needs to get educated on it.
Second, the data suggest that a small allocation to crypto—between 1-5 percent—can have a meaningful impact on your overall returns. We have a white paper on the topic on our web site; because crypto has had low correlations to other asset classes, a 1 percent allocation to crypto has significantly increased returns without meaningfully increasing risk on a historical basis.
Finally, I’d add this: Anyone who still reflexively dismisses crypto needs to take a step back and re-approach the problem. Harvard, Yale and Stanford are allocating to crypto; Fidelity has launched a major new investment portal for crypto; Andreesen-Horowitz, one of the world’s premier venture capital firms, has launched a fund focused just on crypto; the New York Stock Exchange’s parent company has a major new initiative.
Crypto is not going away. Everyone needs to study it, and most advisors should consider an allocation.
6. You have a fund. How old is it and what has your experience been so far?
Our fund launched on November 22, 2017, and has been running ever since. It offers accredited investors an easy way to get broad-based exposure to the top 10 cryptoassets in a fund that is professionally managed, professionally traded, and uses blue-chip partners for everything from custody to audit to tax. It’s been described as the S&P 500 for crypto; a simple, one-stop shop for high-quality crypto exposure.
We currently serve nearly 700 limited partners in the fund, including high-net-worth individuals, family offices, multi-family offices and RIAs. We’ve had a great reception from investors. I think there are a lot of people out there who know something important is happening in crypto—who see folks like Yale, Stanford and Harvard investing—and want exposure, but don’t know where to start. Our fund offers an easy way to get broad-based exposure to crypto without any idiosyncratic risk. People know that picking winners in tech isn’t easy: Bitcoin has first mover advantage, but then again, so did MySpace. It’s better to get diversified exposure to the space.