Institutional investors are increasingly open to finding a place for digital assets in their portfolios, suggests new research.
A survey conducted by Fidelity Investments and published Thursday found that, already, around 22 percent of investors have some exposure to digital assets, while 40 percent say they are open to taking the plunge in the next five years. Of those that have exposure, most investments were made in the last three years.
Aimed to gain an understanding of how institutions, financial advisors and investors perceive digital assets generally and as part of an investment portfolio, the survey also found that over half (57 percent) prefer to invest in digital assets directly, while 72 percent favor investment products that hold digital assets. Fifty-seven percent said they’d prefer to buy investment products that hold digital asset firms.
For the research, the company said it polled over 400 U.S. institutional investors, including pensions, family offices, crypto and traditional hedge funds and financial advisors, as well as endowments and foundations.
“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 institutional custody and trading services for digital assets.
“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.”
Regarding the appeal of digital assets to investors, the survey further found that the “characteristics” of digital assets had the widest appeal, with 74–80 percent citing that option. Just under half (47 percent), meanwhile, said digital assets appealed as an innovative technology, and 46 percent pointed to a low correlation to other assets.
On the negative side, price volatility, lack of regulatory clarity and a lack of fundamentals were seen as obstacles to investment.
“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 said.