New Zealand Retirement Fund Bets on Bitcoin With 5% Allocation

The KiwiSaver Growth Strategy, a NZ$350 million (US$245 million) retirement fund operated by New Zealand Funds Management, has according to local media allocated 5% of its assets to bitcoin, citing the cryptocurrency’s similarities to gold as one of the biggest reason behind the trade.

According to local news outlet Stuff, New Zealand Funds’ chief investment officer James Grigor revealed he expects BTC to be featured in more KiwiSaver products over the next five years. The fund had to change its offer documents back in October to allow it to buy cryptocurrency.

To Grigor, BTC has become a commodity attractive the same way gold is, as it’s seen as a store of value in times of economic crisis.  Grigor was quoted saying:

If you are happy to invest in gold, you can’t really discount bitcoin.

Grigor noted that the KiwiSaver Growth Strategy retirement fund is built up through “traditional assets classes, your bonds and shares, and they will always be the asset classes that compound over time to give people the best retirement they can get.” However, it invests in other opportunities as they “present themselves.”

The price of bitcoin surged from little over $10,000 late last year to a new all-time high near $62,000 earlier this month, in a process the CIO called the “legitimization” of bitcoin. Pension funds, he said, can now invest in bitcoin. KiwiSaver itself has reportedly invested in Mike Novogratz’ Galaxy Digital funds.

KiwiSaver’s rival funds pointed to they believe investing in bitcoin is “tantamount to gambling, not investing,” and that the cryptocurrency’s use as a store of value was “overstated” as the cryptocurrency’s price is too volatile.

Per Grigor, the fund bought BTC at $10,000 in October 2020 before its massive bull run. While it isn’t clear whether the fund rebalanced its allocation since then, on Twitter an analyst noted that the fund’s performance seems to have been impacted by its BTC exposure.

The fund’s CIO defended that the cryptocurrency market has grown over the last few months, as there are now derivatives allowing fund managers to hedge some of the risk of investing in BTC. While the fund invested in bitcoin and sees its upward trajectory remain unaffected, it will “move onto the next asset class” if it sees “the momentum has gone.”

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