Funds take a stand on crypto as bitcoin hits record highs

Bitcoin’s recent surge above US$105,000 has fuelled predictions of a continued monumental rise, yet many Australian super funds remain hesitant to dive into the world of digital assets, with one fund admitting it is keeping an eye on the space.

In a bold move, AMP confirmed to Super Review last week a modest allocation to bitcoin, saying that the digital currency is now “too big to ignore”.

This marks a significant departure from the cautious stance many of AMP’s industry peers have maintained, despite bitcoin’s growing prominence as an asset class.

UniSuper, for instance, remains firmly opposed to integrating cryptocurrency into its investment strategy.

A spokesperson for the fund told Super Review: “Cryptocurrency does not form part of our investment universe, we don’t believe it is an appropriate asset to allocate our members’ life savings to.”

AustralianSuper, the fund with the most assets, has also opted for a more measured stance. Although it has no plans to directly invest in cryptocurrencies, it is exploring blockchain technology as a potential growth area.

“AustralianSuper does not have any current plans to invest directly in cryptocurrencies,” the fund’s spokesperson told Super Review.

“The fund is looking at blockchain technology as a potential investment opportunity and has made some small investments in companies that use the underlying technology in other ways.”

HESTA struck a more optimistic tone, with a spokesperson telling Super Review that while the fund does not currently invest in cryptocurrency, it is actively monitoring the space.

“At this time, HESTA does not invest in crypto assets. However, we are actively monitoring the institutionalisation of digital assets with our investment management partners,” the fund’s spokesperson said.

Earlier this year, Brian Parker, the chief economist of $300 billion fund Australian Retirement Trust (ART), voiced scepticism about committing member funds to bitcoin.

“If I think about bitcoin, even if I have access to a bitcoin ETF, why should I buy it? It still doesn’t pay me any interest, it’s a highly speculative investment, I still can’t value it in any fundamental way, and I don’t know how it behaves over a number of economic cycles,” Parker told Super Review at the time.

“I can’t be sure about whether it’s a risk-on asset or a defensive asset and so, it remains a very speculative area.”

Super Review understands that ART has not changed its mind and that it continues to have no intention of investing in digital assets in the near future.

Pension funds around the globe are exploring the merits of cryptocurrency, with UK pension fund Cartwright becoming the first in the country to invest in bitcoin last month. Meanwhile, in the US, Michigan’s state pension fund recently became the first to invest in ethereum exchange-traded funds (ETFs), allocating a total of US$11 million to Grayscale’s Ethereum Trust and Ethereum Mini Trust ETFs.

AMP’s foray into crypto

Speaking to Super Review last week, Stuart Eliot, AMP’s head of portfolio management, said 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 earlier this year.

According to Eliot, the bitcoin exposure, which represents around 0.05 per cent of its 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”.

“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,” Eliot said.

Caroline Bowler, CEO of BTC Markets, welcomed the news last week, saying in a statement to Super Review that the crypto exchange is “excited to see AMP stepping into the crypto space”.

“I couldn’t agree more with their strategic approach,” Bowler said.

“The crypto market has grown too significant to ignore. It’s not just about the buzz; it’s about the real potential bitcoin holds as part of a diversified investment strategy.

“By integrating bitcoin into their Dynamic Asset Allocation program, AMP shows a forward-thinking mindset that aligns perfectly with the transformative changes we’ve seen in the financial industry this year.”

Top Aussie regulators oppose crypto

Last month, top Australian regulators dismissed bitcoin’s price surge, labelling it speculative, environmentally damaging, and economically irrelevant.

Speaking at the ASIC Annual Forum, the regulator’s chair Joe Longo cut through the hype with a blunt “who cares” about bitcoin’s price jump. Asked to comment on bitcoin’s performance since the US election, Longo called it a classic case of the “bigger fool theory”.

Joining Longo on a panel, Reserve Bank governor Michele Bullock described bitcoin’s rise as simply “more buyers than sellers”.

Bullock went further, challenging its very definition: “It’s not a currency, it’s not money, it’s being used as some sort of asset class. I don’t understand it,” adding, “I don’t really see a role for it certainly in the Australian economy or the payments system.”

According to recent research by Finder, approximately 27 per cent of Australians, around 5.6 million people, have owned or expressed interest in owning cryptocurrency. Furthermore, about 17 per cent of Australians have actively bought, sold, or held cryptocurrency in the past two years.