Laser Digital, Nomura’s digital asset subsidiary, commissioned an independent global survey with professional investors in 21 countries. There were 14 responses to the survey were from insurance asset managers who collectively manage $273.5 billion. So it’s a small sample, but from a relatively powerful subset of individuals. The collective view was that digital assets are a growing market and need insurance.
Key findings from the research include:
· The insurance asset managers interviewed overwhelmingly regard digital assets as a major part of the investment landscape – 100% of those questioned see digital assets as representing an investment diversification opportunity alongside traditional asset classes such as fixed income, cash, equities and commodities.
· The insurance asset managers interviewed would like to see digital assets more closely integrated with traditional assets. More than six out of seven (86%) questioned want to see digital assets combined with other traditional asset classes to produce ‘all-weather’ income strategies to help cope with the risk of inflation and the debasement risk of fiat currencies.
BACKSTOP
· All of the 14 respondents said that it is important to have the backing of a large traditional financial institution for any digital asset fund or investment vehicle before they or their clients would consider putting money into it.
· Nearly four in five (79%) of the insurance asset managers interviewed are positive about the digital asset class in general and Bitcoin and Ethereum in particular over the next 12 months. Just 7% of respondents are negative about the outlook for the sector while 14% are neutral.
· Around nine out of 10 (93%) say they or their clients are currently considering investing in digital assets.
BITCOIN STARTED THE MARKET. IT DOESN’T DEFINE IT
· More than two-fifths (43%) regard Bitcoin and Ethereum as providing a foundation of the Web 3.0 economy and therefore representing a long-lasting source of investment opportunities. Some 21% believe they represent a long-lasting source of investment opportunities while also being highly speculative assets, while 36% view them simply as highly speculative assets.
· They are not just focused on the big two cryptocurrencies – 93% of those questioned said they saw value in being exposed to other carefully-chose cryptocurrencies beyond Bitcoin and Ethereum. Just 7% saw no value in expanding into other cryptocurrencies.
· The insurance asset managers interviewed reported a wide range of maximum allocations to digital assets under their risk boundaries. More than a fifth (22%) questioned say they can invest up to 4% while 14% can invest up to 5%.
· Half (50%) say their and/or their clients’ total percentage exposure to digital assets will be between 2% and 5% over the next three years, while 43% expect this to be between 5% and 10%
· Our study looks at insurance asset managers’ preferred exposure to the digital asset class and found Value at 93% the most popular ahead of Momentum at 71% and Carry at 64%. However more than six out of seven (86%) said they would favour a risk-adjusted combination of all these factors.
CHALLENGES AND HURDLES
· More than half (57%) of the insurance asset managers interviewed say there are legal or regulatory restrictions applicable to them that could prevent their fund or clients investing in a product that references exposure to digital assets.
· Most would have to make regulatory filings or notifications as a result of holding or investing in financial instruments focused on digital assets. Some 71% of those questioned cited this as an issue while 29% are confident they would not need to make regulatory filings or notifications.
· In addition, around 79% say they are aware of regulatory filings or notifications that the issuer of digital financial instruments must make as a result of investors holding or investing in their financial instruments.
Commenting on the research findings, Dr Jez Mohideen, CEO of Laser Digital, said:
“Our comprehensive study reveals that the majority of institutional investors surveyed saw a clear role for digital assets in the investment management landscape, and the benefits they can bring, such as greater diversification of portfolios.
“For many, their outlook for major digital assets such as Bitcoin and Ethereum is positive, but our study also reveals challenges and hurdles for the market. Many of our survey respondents acknowledged that there are legal and regulatory restrictions that could prevent them from investing in digital assets, and these need to be addressed by the industry in cooperation with regulatory authorities.”
Be the first to comment