Speaking at the Stockbrokers and Investment Advisers Association (SIAA) Conference in Sydney on Monday, JBWere’s head of alternative investments and responsible investing, Gillian Gordon, said that while client sentiment on digital assets varies widely, private wealth firms must act as neutral facilitators as interest in the space continues to grow.
“Digital assets are here to stay, I think anyone that thinks they are not, is not understanding the breadth of the market,” she said. “From a private wealth perspective, there is a broad difference in our client opinion on something like digital assets.”
Gordon described a client base split between enthusiastic adopters of cryptocurrency and those unwilling to engage at all.
“We would have certain clients who are really interested and investing in the space, and very confident, and capable and want to be in that pace. We would have other clients who would absolutely not be interested at all in investing in digital assets,” she said.
“I suppose that is the beauty of private wealth, in that we are a fiduciary, we provide clients choice, and clients then ultimately make the decision that’s right for them.”
While Gordon expressed confidence in bitcoin’s staying power, she was more cautious about other cryptocurrencies.
“I do think bitcoin is here to stay. I think some of the other coins, maybe their fortunes are a little bit harder to predict,” she said.
Still, ignoring digital assets entirely, she warned, would be shortsighted: “To ignore digital assets in a portfolio is ignoring quite an enormous trend that is happening around the world.”
A survey released last year by EY-Parthenon found that institutional investors – including asset managers and family offices – are increasingly planning to incorporate digital assets into their portfolios.
Conducted in the wake of the US SEC’s approval of 11 bitcoin exchange-traded products and a sharp rise in cryptocurrency market capitalisation, the research revealed that 94 per cent of institutions believe in the long-term value of cryptocurrency assets and blockchain technology.
In addition to believing solidly in the long-term viability of digital assets as an investment class, the survey also uncovered that more than two-thirds of institutions are already invested in cryptocurrencies or other digital assets through funds or direct investments.
As of 12pm on Monday (AEDT), the price of bitcoin stood at around US$105,000.
The digital asset is now tipped to hit fresh highs by year-end, with Australian ETF provider Global X lifting its bitcoin price target from US$150,000 to US$200,000.
In a statement on Thursday, Global X investment strategist Justin Lin said this was due to a number of favourable conditions fuelling optimism, such as improving market sentiment, a favourable Trump administration, and rising digital asset investment from both institutional and retail markets.
Echoing Global X’s ETF data, VanEck recently said bitcoin had replaced gold as the asset class “du jour” after staging a breakout in the second half of April.
Late last year, AMP declared cryptocurrency “too big to ignore”, announcing it will allocate a portion of its superannuation assets to bitcoin in a major shift towards digital asset exposure.
Speaking to InvestorDaily at the time, Stuart Eliot, AMP’s head of portfolio management, clarified that after “testing and careful consideration by our investment team and committee”, the company decided to include “a small and risk-controlled position” in digital assets within its Dynamic Asset Allocation program.
“The exposure, which represents around 0.05 per cent of our total superannuation assets under management, recognises the structural changes in the industry over the past year, including the launch of exchange-traded funds by leading international investment managers,” Eliot said.
“While our super members have benefited from the exposure, we fully appreciate the risk and volatility characteristics of this emerging asset class and will continue to carefully manage our holding, which is a fractional component of a highly diversified asset mix.”
