Hedge Fund CFOs and Insurers Show a Growing Appetite for Crypto
There seems to be a rapidly growing appetite for cryptoassets among institutional investors, as nearly a 100% of surveyed hedge fund chief financial officers (CFOs) see their funds investing in crypto by 2026, and more insurers are seen buying shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust.
As much as 98% of hedge fund CFOs expect their funds to invest in crypto within five years, said a recent survey by trust and corporate management company Intertrust.
Furthermore, it found that about one in six CFOs expect to invest at least 10% of their investment holdings in crypto, and on average, respondents expect to invest 7.2% in this asset class.
“From an investor perspective, CFOs are going to have to really ensure they have those controls in place for investors to be comfortable. If one in six expect to invest more than 10% in crypto, then one in six will need to be prepared for that investment,” commented Jonathan White, Global Head of Fund Sales at Intertrust Group.
The survey presents the views of 100 senior-level respondents, split between Continental Europe, the UK, North America and Asia who all have some form of CFO-related responsibility, overseeing average assets under management of USD 7.3bn.
Among the world’s regions, CFOs in North America are the most eager to increase their hedge funds’ exposure to cryptoassets, with an average estimate of almost 11% of assets, as indicated by figures from the report.
“In North America, Europe and the UK, all respondents said they expect to invest at least 1% of their portfolio in [cryptoassets],” Intertrust said.
Globally, only 2% of hedge fund CFOs replied they did not expect to invest their funds’ assets in crypto.
Intertrust admits that the observed spike in interest in crypto comes “after a stellar performance" from cryptoassets such as bitcoin (BTC) and ethereum (ETH) over the past year, and growing interest from institutional and retail investors in digital assets.
“Hedge funds will need to prepare for this change in their allocation. They will need to think about where the assets are custodied, how they strengthen their operational controls around crypto investments and how they verify the assets,” according to the report.
Hedge funds “are well aware not only of the risks but also the long-term potential” of cryptos, David Miller, Executive Director at Quilter Cheviot Investment Management, told the Financial Times.
Meanwhile, in another sign of increasing interest in crypto by established institutional players, six insurers picked up shares of crypto investment vehicles offered by Grayscale Investments in the first quarter, buying shares of Grayscale Bitcoin Trust or Grayscale Ethereum Trust, per S&P Global data.
The insurers who moved to increase their exposure to crypto last quarter included Grinnell Mutual Reinsurance, State Mutual Insurance, Massachusetts Mutual Life Insurance, MassMutual, New York Life Insurance, and Atlantic States Insurance.