An unnamed UK pension fund has invested in Bitcoin, accounting for 3% of its total assets. This marks the first venture into cryptocurrency by a defined benefit pension scheme in the UK.
Strategic Allocation for Long-Term Growth
The fund’s trustees reportedly engaged in a rigorous due diligence process, addressing essential considerations such as Environmental, Social, and Governance (ESG) factors, security concerns, and the investment case for Bitcoin. According to Glenn Cameron, Cartwright's head of digital assets, the decision aligns with the pension fund's 10-year investment horizon, viewing Bitcoin as a hedge against economic volatility. Sam Roberts, Cartwright’s director of investment consulting, explains that this investment is part of a forward-thinking approach to ensure long-term growth and stability. "Trustees are increasingly looking for innovative solutions to future-proof their schemes," Roberts explained. "This bitcoin allocation is a strategic move that not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile." The firm is also planning to launch a Bitcoin Employee Benefits scheme.
Catching Up with Global Peers
Cartwright is urging UK institutional investors to explore Bitcoin investments to avoid lagging behind international counterparts. In the United States, for example, the State of Wisconsin’s pension plan recently made its first Bitcoin allocation, though at a modest 0.1% of its total assets. The UK pension fund’s 3% allocation signals a bolder stance on Bitcoin’s potential. Beyond Bitcoin, other cryptocurrencies such as Ethereum are gaining traction. Michigan’s pension fund recently disclosed investing $10 million in Ethereum ETFs.
The Future of Institutional Crypto Investments
Major global banks are developing products that could eventually include other cryptocurrencies like XRP, Litecoin, and Solana, broadening the horizon for institutional crypto investment.
The UK pension fund's investment in Bitcoin marks a new era for institutional investments in cryptocurrency, potentially paving the way for broader financial adoption globally.
