Key Points
- Australia’s retirement fund AMP invests $27 million in Bitcoin, marking its first significant move in the asset class.
- Despite AMP’s investment, other major funds and critics argue that Bitcoin is unsuitable for retirement funds due to its volatility and lack of yield production.
AMP, Australia’s retirement fund, has made a significant move into the asset class with a $27 million investment in Bitcoin (BTC).
This decision marks it as the first major superannuation fund to seek Bitcoin exposure. Other large funds from the $4 trillion retirement savings industry have decided against it, citing BTC’s volatility.
AMP’s Bitcoin Investment
Anna Shelly, AMP’s Chief Investment Officer, stated that customers with assets in the fund’s balanced and growth investment options are most likely to have exposure to Bitcoin. She justified the investment by stating that $27 million was just 0.05% of its $57 billion in assets under management.
AMP bought Bitcoins in May when BTC was trading in the $60,000-$70,000 range. Shelley explained that the investment was part of a diversification strategy, guided by AMP’s dynamic asset allocation process, which supported Bitcoin due to its “momentum and sentiment.”
Despite AMP’s pioneering investment, other major funds have announced they will not be following suit. Critics, including Reserve Bank governor Michele Bullock, argue that Bitcoin has no place in the Australian economy. He also raised concerns about Bitcoin’s stability and its lack of yield production, stating that it’s unsuitable for retirement funds.
Global Interest in Bitcoin
Pension and retirement funds across the world have shown interest in Bitcoin, especially with the launch of regulated investment products such as spot Bitcoin ETFs. US states like Florida and Jersey City are already considering this option.
Since its launch earlier this year, demand for spot bitcoin ETFs has skyrocketed. BlackRock’s iShares Bitcoin Trust ETF (IBIT) has been leading the pack with its assets under management surpassing $50 billion.
BlackRock, the world’s largest asset manager, officially recommended exposure to Bitcoin following massive inquiries about its IBIT. BlackRock released a report suggesting a 1-2% allocation to Bitcoin ETFs, marking the first time the firm has provided a specific figure for exposure to the cryptocurrency.
The report also highlighted that Bitcoin carries a risk profile comparable to that of the Magnificent Seven companies — Apple, Amazon, Tesla, Nvidia, Meta, Google, and Microsoft. The asset manager justified Bitcoin investments in the wake of rising geopolitical tensions, growing deficits, fragmentation of the global financial system, and other factors.
