[ M A R K E T R E V I E W | C R Y P T O ]
In what may seem like conflicting stances, some of the world’ s largest traditional asset managers are exploring cryptocurrencies, while at the same time seeing little demand from clients, according to multiple industry experts. This exploration is not always a sign of intent however, more just what you would expect from some of the biggest financial institutions on the planet – essentially just having their finger on the pulse.
A lack of regulatory clarity and a chequered past has made the cryptocurrencies while the latter then posted an interview with the BlackRock chief Larry Fink, who said there hadn’ t been any client interest.
Both positions can co-exist, according to experts, who also say a handful of major players are also looking to establish their own cryptocurrency funds.
“ On the traditional side of asset management some are talking about creating a fund which is a passive buy and hold strategy where they are allowing investors
Given the volatility of prices there is certainly a chance for the buy-side to make money when trading crypto, but the risk may not outweigh the reward in the current environment.
Aite Group analyst, Gabriel Wang, recently authored a report on cryptocurrencies and says some asset managers confirmed to him they intended to launch their own crypto funds
“ A couple of asset managers are looking to launch their own crypto investment funds, as they see the
“ Putting a value on where Bitcoin is supposed to trade is difficult, some people think it is zero and others think it is worth one million in the future.”
PETER KAMBOLIN, CHIEF EXECUTIVE OFFICER, SYSTEMATIC ALPHA MANAGEMENT
institutional use of cryptocurrencies a somewhat contentious topic. Subsequently, any comment or suggestion from an investment bank or asset manager is being interpreted as a firm indication of their stance. The reality is, that for those in the upper echelons of the financial markets, any kind of investment phenomenon will be investigated in some way or another, regardless of intent to invest or trade. Whether it’ s blockchain technology, exchange-traded funds( ETFs) or swaps, all new and innovative products fall into the‘ worth a look’ category.
BlackRock was the subject of such scrutiny on 16 July, after stories from Financial News and Bloomberg appeared to be in contradiction, with the former suggesting the asset manager had set up a working group to explore exposure to a basket of cryptocurrencies, essentially giving them easy access to this different asset class” says Ed Gouldstone, head of product management for Linedata’ s asset management business.
“ What I like about this is that it’ s an area where asset managers can be innovative, they are starting to offer new products to their investors. It may be they are doing it on more of an individual client basis or test strategies themselves before an outright launch.”
Maciek Kolodziejczyk, founder at Stable Foundation, believes that members of major financial institutions certainly have an interest, even if it is from a personal point of view right now.
“ A lot of people from big institutions are trading their own money, or friend’ s and family’ s money but not the institution’ s,” he explained. appeal of cryptos as an emerging asset class,” he says.“ On the other side, trading orders have been flushing into OTC desks that handle crypto trades, mostly coming from hedge funds and prop trading shops right now.”
Speaking to The TRADE, one asset manager said they did not feel the need to be“ first to the party” and that they have more to be getting on with than trying to understand the world of cryptos.
“ As an institutional asset manager we don’ t yet see underlying clients expressing much interest in cryptos,” they explained, adding that the‘ Wild West’ nature of the market is not ideal in the age of transparency.“ In time though, once things are a lot clearer and possibly regulated, we may see a lot more client interest and look to get involved.”
60 // TheTrade // Autumn 2018