09.12.2021

Bloomberg: US pension funds plan to invest in cryptocurrencies

Two pension funds from Virginia intend to invest in cryptocurrencies, Bloomberg reports.

The Police Officers ‘Pension Fund and the Fairfax County Civil Servants’ Pension Fund first became familiar with the cryptocurrency space two years ago, investing in specialized venture funds. Now they plan to make a much more direct investment by investing $ 50 million in the main fund Parataxis Capital Management LLC, which buys various digital tokens and cryptocurrency derivatives. The decision is still pending approval.

In total, the two funds manage about $ 7.15 billion. They have already invested in Morgan Creek Asset Management funds several times, and this year they also started working with the crypto-venture capital firm Blockchain Capital. Some of the funds went to cryptocurrencies such as bitcoin, but the vast majority of assets went to tech startups, so these investments were counted as venture investments. Parataxis differs in specialization, as it works directly with cryptocurrencies.

“We believe the volatility of cryptocurrencies will continue, which is good for value traders. This is an area where spread and interest will grow. We consider it rather ineffective, so we see opportunities with a high alpha coefficient, which we want to take advantage of, “said Catherine Molnar, investment director of the Police Officers’ Fund.

As noted by Bloomberg, many pension and trust funds are exploring the issue of cryptocurrencies, but few are daring to invest given regulatory uncertainty and high volatility. Molnar explained that volatility is the main attractive feature of such investments. Initially, her fund was focused on investing 2% in the funds Morgan Creek and Blockchain Capital, but later this share reached 7% due to the growth in asset value. Cryptocurrencies, she said, became an important factor in the fund’s performance in the second quarter.

At the same time, the fund is not going to buy cryptocurrencies directly, since it does not see sufficient grounds to conclude, for example, that bitcoin can be compared to gold.

“Three years ago, we were not ready to place a bet on which cryptocurrency would emerge as a leader. And I’m not sure that we are ready to make such a bet today, ”added Molnar.

Parataxis was opened in 2019 by Edward Chin, formerly of Mike Novogratz’s Galaxy Digital Holdings, and Tejas Nalwal, former portfolio manager of cryptocurrency hedge fund LedgerPrime. The company has $ 55 million under management and is investing in a variety of digital assets, from bitcoin to DeFi tokens, and plans to open another fund.

“This is our first pension fund. We are in talks with a couple of others and a couple of trust funds. Obviously, people are trying to gain access to the market, ” Chin said.

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