Institutional Investors See a Place for Digital Assets in Investment
Portfolios
BOSTON–(BUSINESS WIRE)–Institutional investors are finding appeal in digital assets and many
are looking to invest more in digital assets over the next five years,
according to new research from Fidelity Investments®.
According to the survey, about 22% of institutional investors already
have some exposure to digital assets, with most investments having been
made within the past three years. Four in ten respondents say they are
open to future investments in digital assets over the next five years.
These findings are part of a Fidelity Investments research study to
better understand how institutions, advisors, and investors think about
digital assets both overall, and as part of an investment portfolio.
More than 400 U.S. institutional investors were surveyed, including
pensions, family offices, crypto and traditional hedge funds, financial
advisors and endowments and foundations.
Almost half of the institutional investors surveyed (47%) view digital
assets as having a place in their investment portfolios, but opinions
vary on how these investors would prefer to hold digital assets in the
future.
- 72% prefer to buy investment products that hold digital assets
- 57% prefer to buy crypto assets directly
-
57% prefer to buy an investment product that holds digital asset
companies
“We’ve seen a maturation of interest in digital assets from early
adopters, like crypto hedge funds, to traditional institutional
investors like family offices and endowments,” said Tom Jessop,
president of Fidelity Digital AssetsSM, a provider of custody
and trade execution services for digital assets to institutional
investors. “More institutional investors are engaging with digital
assets, either directly or through service providers, as the potential
impact of blockchain technology on financial markets – new and old –
becomes more readily apparent.”
Finding Appeal
Institutions are overwhelmingly favorable about the appealing
characteristics of digital assets. Nearly seven in ten respondents cited
certain characteristics of digital assets as appealing.
-
Nearly half of respondents (47%) appreciate that digital assets are an
innovative technology play -
46% find digital assets’ low correlation to other assets among the
most appealing characteristic -
Financial advisors (74%) and family offices (80%) view the
characteristics of digital assets most favorably
Among the obstacles to digital asset investments cited by respondents
were price volatility, lack of clarity around regulation, the limited
track record and lack of fundamentals.
“Institutions are doing the work to develop their own investment
theses—but there’s more work to be done as it relates to describing
digital assets and blockchain technology in terms that are familiar to
them,” said Jessop. “For example, price volatility, which was a primary
concern of survey respondents, may dampen as the underlying custody,
trading and financing infrastructure continues to develop in a direction
that traditional market participants are familiar with.”
Jessop continued: “Institutional sentiment mirrors many of the positive
developments we’ve seen in the underlying ecosystem. Venture investment
in the sector continues at a healthy pace, complemented by an increasing
number of security token offerings (STOs), and the global regulatory
environment remains cautiously constructive.
Another indication of a growing ecosystem around digital assets is high
transaction activity on the Bitcoin blockchain. Institutions are more
aware of these developments now than they were six or twelve months ago,
which is a positive sign for continued interest and adoption.”
Custody and Counterparties
Many institutions showing interest in this space either own digital
assets and need a custodian or they want to invest in digital assets,
but first need a custodian. Eighteen percent are using third party
custodians and another 13% are doing self-custody. Another 6% are using
a non-custodial exchange. When gaining exposure to digital assets,
investors overall prefer to deal with a traditional financial firm (37%)
followed by dedicated crypto-focused financial firms (24%). Across all
institutional segments, when considering a custodian for digital assets,
76% of institutions surveyed placed security and safety as their most
important considerations.
About the Survey
Greenwich Associates conducted the study on behalf of the Fidelity
Center for Applied Technology between November 26, 2018 and February 8,
2019 including 441 institutional investors in the U.S. including
pensions, family offices, digital and traditional hedge funds, financial
advisors and endowment and foundations. The survey was executed in
association with Greenwich Associates. Approximately half of survey
participants responded to an online survey and half via telephone
interviews.
About Fidelity Digital Assets
Fidelity Digital Assets
Services, LLC (“Fidelity Digital Assets”), offers a full-service
enterprise-grade platform for securing, trading and supporting digital
assets, such as bitcoin. Fidelity Digital AssetsSM combines
the operational and technical capabilities of the broader Fidelity
organization with dedicated blockchain expertise to deliver a completely
new offering for institutional investors. Fidelity Investments is one of
the world’s largest and most diversified financial services providers
with more than $7.3 trillion in client assets under administration.
Learn more at http://fidelitydigitalassets.com.
Fidelity Digital Assets is a service mark of FMR LLC. Services are
provided by Fidelity Digital Asset Services, LLC.
About Fidelity Center for Applied Technology
Fidelity
Center for Applied Technology (FCAT) helps Fidelity’s clients and
businesses imagine the possibilities of new ideas and emerging
technologies to enhance the customer experience. FCAT’s ideas begin with
outside in research and academic partnerships and evolve through user
testing. The ideas come to life through prototypes that lay the
foundation for new products and services. Whether it’s virtual reality,
artificial intelligence, digital currencies or blockchains, FCAT is
testing it out and looking for new ways of using it to improve people’s
financial lives.
About Fidelity Investments
Fidelity’s mission is to inspire
better futures and deliver better outcomes for the customers and
businesses we serve. With assets under administration of $7.4 trillion,
including managed assets of $2.7 trillion as of March 31, 2019, we focus
on meeting the unique needs of a diverse set of customers: helping more
than 30 million people invest their own life savings, 22,000 businesses
manage employee benefit programs, as well as providing more than 13,500
financial advisory firms with investment and technology solutions to
invest their own clients’ money. Privately held for more than 70 years,
Fidelity employs more than 40,000 associates who are focused on the
long-term success of our customers. For more information about Fidelity
Investments, visit https://www.fidelity.com/about.
Fidelity, Fidelity Investments, and the Fidelity Investments & Pyramid
Design logo are registered service marks of FMR LLC. Fidelity Digital
Assets and the Fidelity Digital Assets logo are service marks of FMR LLC.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem
Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc.,
500
Salem St., Smithfield, RI 02917
National Financial Services LLC, Member NYSE, SIPC,
200 Seaport
Boulevard, Boston, MA 02110
884450.2.0
© 2019 FMR LLC. All rights reserved.
Contacts
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Corporate
Communications
(617) 563-5800
fidelitycorporateaffairs@fmr.com
Arlene
Roberts
(617) 392-2840
arlene.roberts@fmr.com