Many asset owners remain cautious about investing fiduciary capital into cryptocurrencies, often due to perceived volatility and uncertain fundamentals. However, those allocators who have embraced digital assets argue they could serve as an emerging store-of-value asset, much like gold. This perspective is exemplified by AMP Super, an Australian fund with A$60 billion (approximately $39 billion) in assets, which made a notable “small” allocation to Bitcoin futures last year through its dynamic asset allocation (DAA) program.
The decision to invest in Bitcoin was met with strong support from its members, as revealed by Stuart Eliot, head of portfolio design and management at AMP Super. Following the announcement, the superannuation contact center experienced a surge in inquiries from members eager to know which funds included Bitcoin investments. This enthusiasm highlighted a significant member interest in direct exposure to cryptocurrencies.
Eliot shared insights at the Fiduciary Investors Symposium at Oxford University, explaining that when assessing Bitcoin against key characteristics of a store-of-value asset—such as scarcity, durability, portability, and liquidity—AMP Super concluded that Bitcoin aligns more closely with these attributes than both gold and fiat currency. Store-of-value assets are essential in the superannuation context for preserving portfolio value, hedging against monetary debasement and event risk, and enhancing portfolio returns.
Despite the advantages of store-of-value assets, Eliot noted that many allocators are hindered by a lack of a reliable capital market forecasting framework, particularly for gold. AMP Super addresses this by employing various trading signals in its DAA program, including price momentum, investor sentiment, and liquidity measures, especially in relation to inflation. He pointed out that the responsiveness of both Bitcoin and gold to inflation is not dictated solely by inflation levels, but rather by changes in inflation expectations and realized rates.
Recently, the fund has begun to explore on-chain analytics, which leverages public blockchain data to better understand cryptocurrency price dynamics. By analyzing transaction patterns to determine potential price movements, AMP Super has found significant trading insights, such as the price at which each Bitcoin last transacted, providing valuable trading signals.
The conversation also broadened to include technological advancements in cryptocurrency and tokenization—the process of converting financial asset rights into digital tokens on a blockchain. Robert Crossley, global head of industry and digital advisory services at Franklin Templeton, emphasized that future assets will be programmable and managed through digital wallets, transforming the industry’s cost structure and opening up new possibilities.
In the UK, regulators have begun to explore the integration of tokenization in asset management, with the Financial Conduct Authority recently supporting a “direct to fund” model in a consultation paper. This model allows end investors to purchase fund shares directly, bypassing traditional fund management structures.
Crossley highlighted the pressing need for education within asset management firms regarding these digital innovations. He explained that while tokenization is frequently discussed, it often leads to duplication rather than streamlined operations, as firms reconcile legal records with their on-chain counterparts.
Education plays a crucial role in helping asset allocators discern where genuine progress is being made and in understanding the investment opportunities these technological advancements present. He cautioned against the risk of collective complacency, which could leave the industry lagging behind the rapid pace of change.
As digital assets continue to evolve, both Eliot and Crossley advocate for proactive education and strategic allocation to ensure that asset managers can navigate this transformative era effectively.
