Institutional Perspective
Allocation to Digital Assets in an Institutional Portfolio
Information for Accredited Investors
and Financial Advisors
Institutional Perspective
New Opportunities for Traditional
Asset Managers
Throughout the process of portfolio
construction, institutional investors seek to improve the efficiency frontiers of their
portfolios. This is usually achieved through diversification into uncorrelated assets.
Statistical evidence shows that incorporating a small proportion of digital assets results
in a significant positive effect on the portfolio, without materially impacting the
portfolio's risk profile.
Impact of
Digital Asset Allocation to an
Institutional Portfolio
Institutional Portfolio
Impact of 1%,3% and 5% BTC Allocations to a Standard 40%/60% Portfolio
over a Statistically-Significant 11 Year Period
(31 Dec 2012 – 31 Dec 2023, with daily rebalancing to maintain targeted allocations)
over a Statistically-Significant 11 Year Period
(31 Dec 2012 – 31 Dec 2023, with daily rebalancing to maintain targeted allocations)
Basic 60/40 portfolio composition:
• 60% S&P500 Total Return Index
• 40% US Treasury Total Return Bond Index
Source: Federal Reserve Bank, CoinDesk
• 60% S&P500 Total Return Index
• 40% US Treasury Total Return Bond Index
Source: Federal Reserve Bank, CoinDesk
The strategic
inclusion of a small, single-digit percentage to a larger portfolio may bring about an
asymmetric positive shift, significantly boosting the portfolio's performance, whilst having
a limited effect on the risk profile.
Bitcoin and Market Cyclicality: A Quantitative Examination
(An 10.5 year perspective, 31 Dec 2012 - 30 Jun 2023) BTC/US$ Price
(An 10.5 year perspective, 31 Dec 2012 - 30 Jun 2023) BTC/US$ Price
Source: CoinMarketCap, Coingecko
When analyzed in
logarithmic scale, Bitcoin's historical price trend unveils three principal crypto winters
in 2014, 2018, and 2022. Despite these periods, Bitcoin has persistently achieved robust
results over every 4-year cycle. As visualized in the graph, each of these cycles yields
higher highs and lows, implying a continuous increase rather than a return to previous
levels.
BTC Price Movements at Times of Significant SPX corrections
(12.5 years or peak to trough observations, 1 Jan 2011 - 30 Jun 2023)
(12.5 years or peak to trough observations, 1 Jan 2011 - 30 Jun 2023)
We have pulled
together all the major corrections of the S&P500 Index since 2011, and superimposed
movements of Bitcoin over the same timeframes.
Since Bitcoin's creation, it has exhibited largely an independent behavioural pattern during several corrections of the S&P 500. Bitcoin is certainly not immune to large swings in its price, and its volatility has remained elevated. Though, as can be seen in the graph the fluctuating relationship between equities and digital assets means that an allocation to this dynamic asset class enhances portfolio diversification.
Since Bitcoin's creation, it has exhibited largely an independent behavioural pattern during several corrections of the S&P 500. Bitcoin is certainly not immune to large swings in its price, and its volatility has remained elevated. Though, as can be seen in the graph the fluctuating relationship between equities and digital assets means that an allocation to this dynamic asset class enhances portfolio diversification.
Invest with Nickel
To better understand how Nickel
can work with you and your clients, please get in touch.
Investing directly into
Nickel's Funds
Nickel's platform is
open for professional investors with a minimum investment amount of $250,000 -
$1,000,000.
We require a self-certification that your investment with us would not exceed 10% of your AUM or Total Net Worth. As a good practice, Nickel would recommend that allocation to digital assets be kept within 1% to 3% of your investment portfolio to ensure you are able to maintain a sound financial position at times of market volatility.
Fund documentation can be requested on a reverse solicitation basis by signing an online request. Please kindly complete the form below to initiate the dialogue with our team.
We require a self-certification that your investment with us would not exceed 10% of your AUM or Total Net Worth. As a good practice, Nickel would recommend that allocation to digital assets be kept within 1% to 3% of your investment portfolio to ensure you are able to maintain a sound financial position at times of market volatility.
Fund documentation can be requested on a reverse solicitation basis by signing an online request. Please kindly complete the form below to initiate the dialogue with our team.
Working with your
Financial Advisor
Many advisors are
increasingly getting questioned on the topic of cryptoassets by their clients. We are
willing to commit time to help you get familiarised with the digital assets space and
explore how allocating to this asset class can help meet the investment needs of your
clients.
For investors looking to allocate less than $250,000, we recommend discussing the opportunity with your financial advisors, who should be able to advise on various options on how to access the digital asset market.
You may also ask your advisor to get in touch with us, using the contact form below. We would be more than happy to commit time to help you explore how an allocation to this asset class can support your investment objectives, whilst maintaining a prudent level of risk exposure.
For investors looking to allocate less than $250,000, we recommend discussing the opportunity with your financial advisors, who should be able to advise on various options on how to access the digital asset market.
You may also ask your advisor to get in touch with us, using the contact form below. We would be more than happy to commit time to help you explore how an allocation to this asset class can support your investment objectives, whilst maintaining a prudent level of risk exposure.
This form will provide you with the relevant investment documentation.
Please complete and submit to proceed.