Page 19 - Investment Advisor March 2021

ALTERNATIVE INVESTMENTS

By Michael S. Fischer and Bernice Napach

Few Retirement Plans Offer Alts in Target

Date Funds: PGIM

Also, Bitwise plans to launch a new public cryptocurrency fund.

nly 13% of retirement plans Trust and Clearing Corp., the Bitwise
offer alternative investment Bitcoin Fund would be available to trade
Ooptions, according to research in traditional brokerage accounts.
released Wednesday by PGIM, the Bitwise plans to list the fund on the
global asset management business of OTCQX, the top tier of the over-the-
Prudential Financial. counter market, and would charge a 1.5%
In addition, just 24% of plan spon- expense ratio compared to the 2% charged
sors have incorporated environmen- by the Grayscale Bitcoin Trust (GBTC) and
tal, social and governance approaches 2.5% charged by BITW, which includes
into the plan over the past three years, other cryptocurrencies. Fidelity Digital
PGIM reported. Asset Services would serve as custodian.
“The average American worker investment options as part of their A December 2020 Bitwise survey
doesn’t have access to the same types target-date funds are: of 1,000 financial advisors’ attitudes
of investments currently available to • Real estate private equity: 9% toward crypto assets found that 9.4%
institutional and high-net-worth inves- • Real estate private debt: 5% were including cryptocurrencies in cli-
tors,” PGIM’s head of institutional • Hedge funds: 4% ent portfolios and 17% were considering
defined contribution, Josh Cohen, said • Private equity: 4% a crypto allocation in 2021.
in a statement. • Liquid alternatives: 4%. About half said they were attracted to
“In a world where we are experiencing Sixty-seven percent of plan sponsors crypto’s low correlation to other assets,
changing demographics, aging popula- explained that the need for enhanced 38% were attracted to potential high
tions and issues of inequality, it is impera- participant education was the reason for returns and 25% saw crypto as a poten-
tive that individual investors have access not including alternatives as an invest- tial hedge against inflation, up from 9%
to quality investments to help them build ment option. Around a third said the the previous year.
and maintain their wealth, particularly reasons were operational challenges, In early February BitCoin was trad-
when it comes to retirement.” perceived litigation risk and cost. ing near $35,000, down from a high near
Cohen argued in a blog post last year $41,000 in early January but more than
that defined contribution plans may be BITWISE PLANS TO LAUNCH PUBLIC 3.5 times its price a year ago. In early
the best starting point, as they offer the BITCOIN FUND afternoon trading on Feb. 2, BITW was
fiduciary oversight, institutional pricing Bitwise Asset Management has begun the trading near $56 a share, well below its
and long-term time horizon needed to regulatory process to launch a second intraday high of $147 reached during
effectively deliver ESG and alternative cryptocurrency fund open to the public, its first week of trading but more than
strategies to individuals. one focused just on Bitcoin. Its first fund, double its price on its first day.
PGIM’s new research is the second the Bitwise 10 Crypto Index Fund (BITW) Asked whether the new fund is part
of a three-part series on the evolving debuted in early December and currently of a larger effort by Bitcoin champi-
Montri Thipsorn/Shutterstock veyed 138 DC plan sponsors from March Fund, has been available as a private which it has rejected in the past, Matt
ons to get the Securities and Exchange
has close to $590 million in assets.
DC landscape conducted in partnership
Commission to approve a Bitcoin ETF,
The new fund, the Bitwise Bitcoin
with Greenwich Associates, which sur-
placement to accredited investors since
Hougan, Bitwise’s chief investment
5 through July 17. Each plan sponsor had
at least one 401(k) plan and at least $100
officer, said, “We and other asset man-
December 2018, like BITW was before
million in 401(k) assets.
agers are working to make a Bitcoin or
its launch for public consumption.
Plan sponsors that say they cur-
crypto ETF a reality” and “we will get
If cleared by the Financial Industry
there eventually.”
rently incorporate specific alternative
Regulatory Authority and the Depository
MARCH 2021 INVESTMENT ADVISOR 17