Amid the recent warnings issued by the UK Financial Conduct Authority on crypto scams, the giant asset manager Ruffer Investment has defended its decision to allocate about 2.5% of its portfolio in BTC.
The UK-based company with over $27 billion AUM said that bitcoin’s adoption is still early as most investors are “desperate” for alternative safe-haven instruments during these challenging times.
Ruffer Investment Doubles-Down On BTC
CryptoPotato reported in December that the founded in 1994 asset manager had allocated 2.5% of its portfolio in bitcoin. While the initial reports claimed that this percentage represented about $15 million, Ruffer later revealed that the actual amount is considerably higher – about $750 million.
In a more recent note to investors, cited by Portfolio Adviser, the firm outlined its “history of using unconventional protections” in its portfolio. The company also said that its BTC purchase is a “small allocation to an idiosyncratic asset class which we think brings something significantly different to the portfolio.”
“Due to zero interest rates, the investment world is desperate for new safe-havens and uncorrelated assets. We think we are relatively early to this, at the foothills of a long trend of institutional adoption and financialization of bitcoin.”
Ruffer also addressed the recent warnings issued by the UK’s regulator, in which the FCA highlighted the dangers of crypto scams and projects offering “too-good-to-be-true” investment opportunities. However, the asset manager believes that investors should view this “bad reputation” as a “risk premium.”
“As we move through the process of normalization, regulation, and institutionalization, the compression of this premium can have a dramatic effect on the price.”
Nevertheless, Ruffer admitted that it could be wrong in its predictions, in which case the company would lose money – “this explains why we have kept the position size small but meaningful.”
Significant Growth In Months
Ruffer maintained its long-term BTC position as it refuted any assumptions that it may dispose of the holdings due to the substantial price growth since the initial purchase. The company said that the bitcoin price expansion has caused the allocation percentage to rise above 3% in just a few months.
Moreover, Ruffer outlined that it has holdings in two proxy equities in other firms with sizeable positions in bitcoin, namely MicroStrategy and Galaxy Digital.
Michael Saylor’s NASDAQ-listed business intelligence giant has purchased more than one billion in BTC since August 2020. Moreover, the company’s stocks have soared after the first announcement.
On the other hand, Galaxy Digital, ran by Mike Novogratz, is a financial services company dedicated to the crypto industry with millions of dollars in BTC as well.