Pension Funds and Investing in Crypto?

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Investing in crypto?

There are millions worldwide depending on pensions for their retirements. Unfortunately, pension funds don’t always do so well.  For instance, in 2012, Air Canada went into a massive $4.2 billion pension solvency deficit. The largest public pension fund in the United States – the California Public Employees’ Retirement System – has $300 billion worth of assets and is less than 70% funded.

According to the founder of digital investment company Morgan Creek Digital, some of the problems facing pensions can be solved by buying Bitcoin or otherwise investing in crypto

Anthony Pompliano, Morgan Creek Digital’s founder, believes that crypto should be part of every pension fund.  To back up his belief, Morgan Creek Digital made a $1 million bet for a cryptocurrency index fund not long ago.

Pension funds buying Bitcoin, investing in crypto?

According to the terms of the bet, Morgan Creek Digital will receive $1 million if its index outperforms the S&P 500 and will have to shell out $1 million if the S&P 500 index outperforms it in the 10 years.

Morgan Creek Digital is not alone.  Delphi Digital – a crypto-and blockchain-centric research unit – agrees with Pompliano’s assessment. Delphi Digital confirmed that it believes that a small allocation into the cryptocurrency (Bitcoin) is logical statistically. The group noted that having 3% of investable capital aside into Bitcoin will produce the highest Sharpe ratio. In addition to this, it noted that BTC has an asymmetric return profile, which it says means the flagship crypto has more advantages than disadvantages.

But will a multi-million dollar pension fund invest in the cryptocurrency market? The 300 largest pension funds control around 6 trillion US dollars in assets. It seems unlikely that these pension funds will be investing in cryptocurrency anytime soon, no matter what advantages BTC or other cryptocurrencies have. Another reason is that pension funds have large amounts of cash to invest and when it comes to private and listed companies, they are possibly the largest investors. Crypto, on the other hand, is not regulated and is very volatile in nature.

Maybe time will change things?

Chuck Lauber, portfolio manager at First National Fund Advisors, said that in America, pension funds are bound by red tape that leads to most of them being “‘late to the game’ in the realm of investment opportunity.”  He argued that it will take time for the pension funds to get comfortable buying Bitcoin. He said that they need to educate stakeholders about crypto and make the crypto industry even clearer/easier to understand. Further, he wrote, “When one makes the decision, it will create a cascading effect that leads to hundreds of them jumping in.”


Time will tell whether the future will concur with these assessments, or whether their views are wrongly colored by rose-colored glasses.


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