3iQ Research Group consolidates the top five cryptoasset stories of interest to investment advisors and our investors.
Private Family Wealth Office Outlines Process of Adding Cryptocurrencies to Asset Allocation
November 4 – Victor Kuntzevitsky, CFA of Northland Wealth Management has outlined the process of adding cryptocurrencies to the asset allocation of a Canadian private family wealth office. According to Kuntzevitsky, adding an entirely new asset class or changing asset class weights to accommodate cryptocurrencies is to achieve a higher return per unit of risk taken. “The way the math works is that you want to add assets with lower correlation to other assets in the portfolio – although on its own it may be more volatile,” said Kuntzevitsky. Northland Wealth Management formulated a specific market outlook by conducting thousands of hours of due diligence, which included reading or listening to podcast interviews, attending cryptocurrency conferences, and meeting with prominent thought leaders in the cryptocurrency industry. “This type of asset has unique return characteristics with asymmetric returns – meaning profits are more skewed toward the upside than the downside. Portfolio management would dictate that it would be most appropriate in tax sheltered investment vehicles. Have you tried to buy bitcoin in your TFSA? We were able to identify a solution that could be invested within that will shelter clients’ gains,” said Kuntzevitsky.
Read the full article from Northland Wealth Management here.
3iQ’s New Bitcoin Fund Could be a Triumph for Retail Investor Freedom
November 6 – 3iQ’s “The Bitcoin Fund” will be the first opportunity for retail investors to gain exposure to bitcoin in their traditional brokerage accounts. For Canadian crypto-advocates, the decision was largely seen as a decisive victory, given that the approval of bitcoin ETFs in the United States have been continuously pushed back by the US Securities and Exchange Commission (SEC). 3iQ will be the first fund manager to provide retail investors with exposure to the price movements of bitcoin through a regulated investment fund on a major stock exchange. “Canadians deserve a regulated product in which to invest,” said Fred Pye, the CEO of 3iQ. “It came out loud and clear in the decision that absolutely Canadians should be able to invest in this asset class with the comfort of a regulated product.” Pending the fund’s expected launch sometime near the end of the year, investment advisors will also have the opportunity to allocate bitcoin to their client’s portfolios if they are looking for exposure. “There are two questions investment advisors should ask themselves: is money going digital? The answer is yes. And is money going digital non-government controlled? The answer is probably yes,” said Pye. “Therefore, your asset allocation or your exposure to this asset class should be greater than zero, that’s all. It doesn’t have to be 5% 10%; it just has to be greater than zero because it’s not 100% probability that it fails.”
Read the full article from Wealth Professional here.
RBC Exploring Cryptocurrency Trading Platform
November 11 – RBC is exploring the launch of a cryptocurrency trading platform that will allow its clients to buy cryptocurrencies for investment purposes, or to use either online or in-store. According to The Logic, US patents filed in April became available to the public in October showing that the major Canadian bank is looking to make an entrance in the sector. The trading platform will allow the purchase of bitcoin or ether, and the “transfer of funds combining different types of cryptocurrencies”. The bank is also exploring the creation of cryptocurrency bank accounts, perhaps alluding to the creation of client-custody solutions. If launched, RBC would be the first Canadian bank to offer a trading platform to its clients. “I can’t think of one of the big banks anywhere in the world that has a patent that directly relates to a crypto exchange,” said Marc Kaufman, a partner at Rimon Law.
Read the full report from Financial Post here.
Bank of Canada: Canadian Bitcoin Awareness and Usage Increased in 2018
November 5 – The Bank of Canada has released an update to its annual cryptocurrency usage and adoption report. The “2018 Bitcoin Omnibus Survey: Awareness and Usage” report outlined that cryptocurrency awareness had increased from 62% in 2016 to 89% in 2018. Survey respondents that had a higher level of financial literacy also had a greater awareness of cryptocurrencies. The report also noted that bitcoin ownership increased from 3% in 2016 to 5% in 2018. Interestingly, increases in bitcoin ownership were not uniform across all Canadian demographic groups, as some groups had a much higher change over the same time periods studied. “For example, while there was little change in ownership among men or those aged 18 to 34, ownership increased more among women and those aged 35 or older,” said the report. The Bank of Canada also found that those with higher education, or higher household income, had a greater chance of owning bitcoin than those with a lower education or lower household income.
Read the full article from Investment Executive here.
Read the report from The Bank of Canada here.
Pension Funds Double Crypto Exposure to 1% of Total Assets
November 8 – Two pension funds from the Fairfax Retirement System in Fairfax County, Virginia have recently doubled their investments in crypto funds. The pension funds, known as the Police Officer’s Retirement System and the Employees’ Retirement System, now have 1% of their total assets invested in Morgan Creek Digital’s crypto funds. The two pension funds invested an additional 55 million USD in the funds last month after success from their first investments made earlier this year. The funds offer just 15% exposure to real cryptocurrencies, as the rest of the fund’s investments are made in blockchain-related infrastructure companies and other illiquid alternatives in the sector. “We’re looking for disruptive innovation – anything that can be negatively correlated to other things we own,” said Andy Spellar, the Chief Investment Officer of the employee’s fund. “So if we own a bunch of banks, this is a way to hedge against their monolithic and slow moving processes.”
Read the full article from the CoinDesk here.
3iQ Bitcoin Trust (Class A) : NAV as at November 8, 2019
Underlying cryptoasset prices sourced from Bloomberg.View charts and more fund data at https://www.theglobeandmail.com/investing/markets/funds/FBCBT.CF/performance/
3iQ Global Cryptoasset Fund (Class A): NAV as at November 8, 2019
Underlying cryptoasset prices sourced from Bloomberg.View charts and more fund data at https://www.theglobeandmail.com/investing/markets/funds/TIQ101.CF/performance/
3iQ Corp. (“3iQ”) is the first Canadian investment fund manager to agree to terms and conditions with the Canadian securities regulatory authorities which permit 3iQ to manage a multi-cryptoasset investment fund available to Canadian accredited investors. 3iQ provides accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.