While cryptocurrency has gained popularity in some circles in the financial industry, investors are not ready to include it in their portfolios, according to a recent survey by Morningstar.
In the survey of 1,400 Americans, Morningstar posed 16 potential retirement plan features and asked participants to rank them by importance to their investment portfolio.
Respondents were given choices such as target-date funds, the option to make after-tax (Roth) contributions, more “alternative” investments such as real estate investment trusts and commodities, and investments focused on environment, social, and governance factors.
Morningstar said it was clear that investors are not yet warmed to the idea of having the option to invest in cryptocurrencies such as bitcoin. It was the choice that participants most often ranked last, Morningstar said, noting that about 24% of respondents ranked it last, and only 3% ranked it first. Morningstar noted that the mean and median ranks were 11.08 and 12, respectively, out of 16.
The younger generation, however, showed more of an appetite for cryptocurrency. Nearly 5% of Generation Z and millennials ranked cryptocurrency as a desired feature in their portfolios. Only 1.7% of Generation X and 0.8% of baby boomers were in favor of having it in their portfolio, the survey found.
Also of note, the survey found that boomers were about twice as likely as any other generation to rank cryptocurrency last.
But Morningstar cautioned that although younger investors find it more appealing, they are not ready to pack their retirement portfolios with cryptocurrency. There is still a general hesitancy, the firm said.
“While advisors might find it worthwhile to gauge clients’ interest in cryptocurrency, particularly millennial and Generation Z clients, it shouldn't be a primary factor in decision-making," Morningstar said. "People still tend to desire traditionally attractive features such as good employer matches and the availability of professional advice.”