Two pension funds from Virginia state employees in the United States doubled their exposure to the Morgan Creek Digital fund, which has part of its portfolio made up of digital crypto assets. As a result, the fund represents 1% of the resources allocation from these two pension funds from the Fairfax Retirement System, a Virginia county.
These funds had already made a US$ 55 million investment in the second Morgan Creek Digital fund in October. The new allocation occurred after the good preliminary results of the first fund. This is partly due to the performance of the cryptoassets, which account for 15% of Morgan Creek’s investments. Most of the fund’s positions are in blockchain-related infrastructure companies.
Potential for investments in cryptoassets in pension funds
Analyzing the size of the two pension funds, you can get an idea of the potential for investments in cryptoassets. The Police pension fund has US$ 1.45 billion in assets, while the employee’s fund has US$ 4.25 billion.
The first made a US$ 22 million contribution, while the second fund invested US$ 33 million. According to Katherine Molnar, Chief Investment officer of the Police fund, US$ 50 million of the investment was destined to the second fundraising, while US$ 5 million was a separate co-investment in a specific undisclosed project from Morgan Creek.
These figures account for about 1.5% of the fund’s total assets in 2018 and about 0.8% of the county employee’s total assets in the same year. By context, both pension systems typically put about 2% of their assets into a new investment.
Exposure to crypto
Although the crypto segment of the Morgan Creek Digital fund performs well, the investment managers of the retirement system have expressed the greatest interest in the fund’s blockchain investments, which accounts for 85% of the wallet.
The invested fund is a partnership of Morgan Creek Capital Management with Bitwise Asset Management. Aimed at institutional clients, including endowment funds, foundations, pension funds, sovereign wealth funds and family offices, the Digital Asset Index Fund invests in cryptoassets and blockchain companies to obtain profitability.
The investment is a sample of how friendly the institutional capital is to the decentralized digital assets market. Especially at a time of negative interest rates in some countries and an impending global recession if there is a further burst of the assets bubble.