AMP, Australia’s major retirement fund, has made a pioneering move by investing $27 million in Bitcoin, becoming the first significant superannuation fund to do so.
In a major announcement, Australia’s retirement fund AMP announced an investment of $27 million in Bitcoin BTC $105 304 24h volatility: 0.2% Market cap: $2.09 T Vol. 24h: $14.71 B thereby making a significant move in the asset class. This makes it the first major superannuation fund to seek Bitcoin exposure while several large funds from the $4 trillion retirement savings industry have decided to give it a pass considering BTC’s volatility.
AMP’s Chief Investment Officer, Anna Shelly, stated that customers with assets in the fund’s balanced and growth investment options are most likely to have exposure to Bitcoin. Shelly justified the investment adding that $27 million was just 0.05% of its $57 billion in assets under management.
AMP purchased Bitcoins earlier in May when BTC was trading in the $60,000-$70,000 range. Shelley explained that the investment was part of a diversification strategy, guided by AMP’s dynamic asset allocation process, which supported Bitcoin due to its “momentum and sentiment.”
Despite AMP’s pioneering investment, other major funds have announced they will not be following suit. Critics, including Reserve Bank governor Michele Bullock, argue that Bitcoin has no place in the Australian economy. He also shared concerns regarding Bitcoin’s stability and its lack of yield production stating that it’s unsuitable for retirement funds.
Pension and retirement funds across the world have been seeking exposure to Bitcoin off-lately, especially with the launch of regulated investment products such as spot Bitcoin ETFs. US states like Florida and Jersey City, are already considering this option.
Since the launch earlier this year in January, spot bitcoin ETF demand has shot up to the roof. BlackRock’s iShares Bitcoin Trust ETF (IBIT) has been leading the pack with its assets under management crossing $50 billion.
BlackRock Recommends 1-2% Exposure to Bitcoin
With BlackRock’s IBIT getting massive inquiries, the world’s largest asset manager went to make an official recommendation for seeking exposure to Bitcoin.
As it has become known, BlackRock released a new report recommending a 1-2% allocation to Bitcoin ETFs, marking the first time the firm has provided a specific figure for exposure to the cryptocurrency. This recommendation comes in response to a high volume of client inquiries about how much to allocate to Bitcoin and its associated ETF, IBIT.
The report suggests that a 1-2% Bitcoin exposure could be appropriate for a diversified portfolio. It also offers clients a structured approach to incorporating cryptocurrency into their investments.
Interestingly, the BlackRock report goes on to mention that Bitcoin carries a risk profile comparable to that of the Magnificent Seven companies — Apple, Amazon, Tesla, Nvidia, Meta, Google, and Microsoft. The asset manager justified Bitcoin investments in the wake of rising geopolitical tensions, growing deficits, fragmentation of the global financial system, etc.
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