Institutional Investors Recognize Importance of Digital Assets in Diversified Portfolios, Study Reveals

Institutional investors are increasingly valuing the significance of digital assets in their diversified investment portfolios, according to new research from London-based regulated digital assets hedge fund Nickel Digital Asset Management.

The research highlights a growing consensus on the incorporation of digital assets to ensure diversification.

According to the study, which encompassed institutional investors and wealth managers across seven countries managing a combined total of $3.5 trillion, a noteworthy 92% believe digital assets play a crucial role in portfolios.

However, a majority (66%) opine that digital assets should maintain a moderate presence. In contrast, 32% see a more significant role for these assets, while 39% suggest a minimal role. Interestingly, only a small fraction (7%) believes digital assets should be excluded altogether.

Another significant finding from Nickel’s study is the rising optimism around fund launches in the digital assets domain. 62% of the respondents anticipate a rebound in digital asset-focused fund launches within the upcoming year.

However, backing from a major financial institution remains a critical factor for investment. An overwhelming 96% assert the importance of this backing, with 57% emphasizing its utmost importance.

Tokenization, the digital representation of assets on a blockchain, is another trend catching the eye of institutional investors. A robust 85% project growth in tokenization in the upcoming three years, with a quarter of those predicting a dramatic surge.

However, there are still hurdles to broader adoption. Volatility stands out as the primary concern, with 51% of the skeptical investors highlighting it. Security concerns and a lack of understanding about the sector follow closely at 45% and 40%, respectively. Regulatory concerns seem less pressing, with only 34% expressing apprehensions.

Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, commented on the findings:

The diversification potential of digital assets is gradually gaining recognition among institutional investors and wealth managers.” He added, “While opinions differ, a moderate role for digital assets aligns with expert views on how they can bolster performance.

Nickel Digital Asset Management, esteemed for its risk management and consistent performance, serves as a bridge for traditional investors into the digital assets market, offering an array of strategy solutions tailored for various risk profiles.

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