Thanks to the introduction of spot-based Bitcoin ETFs in the United States, certain investor segments are gaining access to the digital asset class for the first time. For example the State of Wisconsin Investment Board, has invested USD 162 million in Bitcoin in the first quarter since their approval.
The US pension fund is thus the first state institution in the United States to announce investments in Bitcoin via the new spot ETFs. This is according to a mandatory financial filing with the US Securities and Exchange Commission (SEC). Specifically, the State of Wisconsin Investment Board (SWIB) holds USD 99 million in BlackRock's IBIT, USD 63 million in Grayscale's GBTC and individual positions in the exchange-traded crypto companies Coinbase, Marathon Digital, Riot Platforms, Block, Cipher Mining, Cleanspark and MicroStrategy.
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US pension funds start allocating to Bitcoin
Established in 1951, the Wisconsin State Investment Board is an independent state agency responsible for managing the assets of the Wisconsin Retirement System, the State Investment Fund (SIF) and other state funds. At the end of 2023, the SWIB managed over USD 156 billion in assets. The Bitcoin ETF allocation thus accounts for around 0.1% of the State of Wisconsin Investment Board's total assets under management.
An allocation by the first US pension fund could send out a signal to other state investment funds. After all, pension funds are actually one of the most conservative investor segments. Their mandate stipulates a long-term increase in value with low volatility in order to secure a growing pension for employees. And with a small portfolio allocation, funds can increase their risk/return profile without experiencing too much of the Bitcoin volatility.
Swiss pension funds lagging behind
Investments in Bitcoin and other cryptocurrencies have long been possible in the Swiss financial center. After all, there is a broad landscape of crypto-financial products. These are permitted under the watchful eye of the Occupational Pension Supervisory Commission (OAK BV) as long as the overall allocation to "alternative investments" does not exceed the legal limit of 15 percent. Nevertheless, Swiss pension funds remain cautious about Bitcoin, as the Swiss Pension Fund Association (ASIP) confirmed at the request of CVJ.CH.
"So far, we at ASIP have seen no signs that pension funds will invest in crypto assets on a large scale. Cryptocurrencies or other digital assets may be booming in specific investment segments or regions of the world. For Swiss pension funds, however, this form of investment is too exotic in many cases and does not fit in with the long-term focus on returns that is necessary for secure pensions." - Swiss Pension Fund Association ASIP
The Zurich umbrella organization of over 900 pension funds represents around two thirds of insured persons in the occupational pension scheme and pension assets of around CHF 650 billion through its members. Countless discussions with industry representatives underline this attitude towards digital assets. Swiss pension funds are simply too conservative, says Hans-Jörg Morath, says Hans-Jörg Morath, Head Product Strategy and Client Coverage at a provider of crypto-asset management solutions.
"In stark contrast to independent asset managers and family offices, Swiss pension funds remain very cautious. Of course, they must remain loyal to their mandates. However, digital assets offer an attractive diversification opportunity within a small portfolio allocation. Hopefully the US allocations will also encourage Swiss funds to take an initial look at the field." - Hans-Jörg Morath, Head Product Strategy & Client Coverage at Digital Asset Solutions AG
