New research from Nickel Digital Asset Management, an investment manager in digital assets regulated in Europe, reveals that 25 percent of professional investors see the risk appetite of pension funds and other institutional investors increase dramatically over the next two years. Another 47 percent think there will be a slight increase, and only nine percent think there will be a drop in their risk appetite.
Institutional investors and wealth managers from the United States, United Kingdom, France, Germany and United Arab Emirates who collectively hold $ 275.5 billion in assets under management were surveyed. The main reason they see institutional investors taking more risk is that the economic and fiscal policies of governments will ensure that riskier asset classes remain attractive. This is the opinion of 62 percent. This was followed by 50% who said it is because there will be strong economic growth coming out of the COVID-19 induced economic crisis. One in three respondents said low yields on bonds and cash mean investors will be willing to take more risk to meet their income and growth goals.
Tighter transparency and regulation around cryptocurrencies and other digital assets was also cited by 29% of professional investors surveyed as a reason institutional investors are willing to take more risk, and 15% said this to About other riskier asset classes such as hedge funds. .
“A combination of low bond yields and liquidity, favorable economic and fiscal policies, as well as increased transparency and regulation in the investment management world are fueling a growing appetite for risk among institutional investors,” said declared Anatoly Crachilov, co-founder and CEO of Nickel Digital. “However, to take advantage of this, fund managers who focus on riskier asset classes must ensure the highest levels of risk management, transparency and reporting to ensure that pension funds and other institutional investors remain within their risk parameters. “
Crachilov recommended that his clients limit their directional exposure to crypto assets to no more than three percent of their overall portfolio. He said this is a good number both to protect against excessive risk while providing exposure to a growing asset class.
Nickel has four funds investing in the digital asset space. Its market-neutral digital asset arbitrage fund pursues an absolute return strategy without expressing a directional opinion on the underlying crypto-asset market. Nickel said it exploits market inefficiencies and price shocks and exploits fluctuations in volatility to generate consistent positive returns within a tightly defined risk management framework.
Diversified Alpha Fund is a non-directional multi-manager multi-strategy fund that combines a portfolio of hard-to-access and limited capacity strategies into a single investable fund. Among the strategies it deploys are high frequency market making, statistical arbitrage, relative value, volatility arbitrage and trend following.
DeFi Liquid Venture Fund is designed to capture the growth potential of larger digital assets space outside of Bitcoin, capturing companies working with Layer 1 and DeFi protocols. The fund is an actively managed research vehicle aimed at identifying early winners and capturing the structural expansion of this space.
Nickel’s Digital Gold Institutional Fund, a Bitcoin tracker, provides liquid access to physically allocated Bitcoin.