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Cryptocurrency has had a rough time in 2022.
Aside from the high-profile FTX scandal and its demise that shocked the world, UK regulators and policymakers continue to crack down on and debate UK cryptocurrencies.
In early December, the High Court in London ordered a number of cryptocurrency exchanges to release some of their users’ personal data after the fraud was discovered.
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In late December, the FCA announced it had cracked down on misleading promotions after 164 cases broke its rules. Many were associated with financiers promoting cryptocurrencies.
While many financial advisors currently believe that crypto assets should not be included in portfolios, the day may come when crypto assets are part of regulated and well-diversified investment portfolios.
But what do multi-asset managers think? In their quest to provide a well-diversified portfolio, alternative asset classes such as infrastructure and real estate play a role in their quest for diversified income streams. I can do it, and I actually do.
Could cryptocurrencies become an “alternative” asset class?
manager’s statement
FTAdviser asked several multi-asset managers for their thoughts on incorporating cryptocurrencies into their portfolios.
“It’s unlikely,” said Ian Jensen-Humphreys, portfolio manager at Quilter Investors.
He explains: “As a basic investor, crypto assets are unlikely to be part of a multi-asset arsenal.
“However, the technology behind cryptocurrencies is more likely to be embedded in our funds indirectly through software integrations and other exposures.”
Similarly, Guillaume Paillat, multi-asset fund manager at Aviva Investors, believes it will be a long time before these assets are properly regulated and valued.
Paillat said:
They are also difficult to mix with other traditional assets such as bonds and stocks as their volatility is highly volatile. ”
He adds:
“But as more countries support cryptocurrency payments, a set of more regulated ‘official’ digital currencies could be the way forward. ”
Listed investment trust
Some cryptocurrency-based exchange-traded funds have been given a green light by regulators such as the Securities and Exchange Commission. These could provide a way for investors to have a form of synthetic exposure to crypto assets without investing directly in them.
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