Australian pension fund makes rare bet on Bitcoin futures

(Bloomberg) — Australian pension and wealth company AMP Ltd. has become one of the first major retirement managers in the country to invest in cryptocurrency products, allocating about A$27 million ($17.2 million) to Bitcoin futures.

AMP senior portfolio manager Steve Flegg posted on LinkedIn this week that the fund “risked a modest allocation to Bitcoin” earlier this year. An AMP spokesperson said the investment was in Bitcoin futures, adding that there were no plans to increase allocations.

Bitcoin topped $100,000 for the first time last week and has risen more than 40% since Donald Trump won the US presidential election in November. Trump has openly supported cryptocurrencies and promised to create a supportive environment for digital asset companies in the United States.

Australia’s A$4.1 trillion superannuation system has so far shown little enthusiasm for investing in cryptocurrencies. Reserve Bank of Australia governor Michelle Bullock recently said Bitcoin has no role in the Australian economy, while the prudential regulator has previously warned that “robust risk management controls” must be used when engaging in activities involving digital assets. .

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Australia’s fast-growing superannuation industry has been under intense scrutiny over a range of issues, including unlisted market valuations, customer service and investment fees. The industry undergoes annual performance testing aimed at weeding out underperforming retirement products. Dozens of pension products offered by AMP failed tests earlier this year, with most failing for the second year running.

Anna Shelley, chief investment officer at AMP, said in emailed comments that investing in Bitcoin futures acknowledges “structural changes” in the digital asset industry over the past year, including the launch of exchange-traded funds that invest directly in Bitcoin and Ethereum by leading investment managers.

“After testing and careful consideration by our investment team and committee, we included small and risk-managed positions in digital assets through our dynamic asset allocation plan in May,” she said, adding that the exposure was approximately It represents 0.05% of its total pension assets.

The Australian Prudential Regulation Authority declined to comment on AMP’s investment in Bitcoin futures, referring Bloomberg to a 2022 letter to the financial sector.

Shelley said: “While our Super Members benefit from exposure, we fully recognize the risk and volatility characteristics of this emerging asset class and will continue to prudently manage our holdings, which are a highly diversified portfolio of assets. a small part of it.”

—With assistance from Richard Henderson.

(Update with comments from Shelley. An earlier version of this story was corrected to reflect an exposure rate of 0.05%, not 0.5%)

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