Cryptocurrencies as part of the family office asset mix

As more family offices look to incorporate cryptocurrency into their portfolios, here's a look at where they can go within the wider assets allocation matrix.
cryptocurrency family offices

What you need to know

  • Cryptocurrencies are well on their way to becoming the fastest technology to ever reach mainstream usage, with the current rate of adoption outpacing the take-up of the internet.
  • Long-term thinking and investment horizons provide family offices with a structural advantage and thus allow for increased risk-taking as long as the returns compensate for the additional volatility.
  • To incorporate some level of crypto exposure into a portfolio, a framework that often works well is adding crypto to the “alternatives” bucket.
Cryptocurrency Updated on October 21, 2022

How do you choose the best asset allocation for your family office? This question probably has as many answers as there are family offices. Each one will have a unique style dictated by the values, vision and purpose of the individual or individuals behind it. Yet while the focus of one family office may differ greatly from another, all tend to have a common mission: to preserve and grow the wealth of the founding family for the long term, preferably spanning generations.

Thus, certain basic investment principles often apply, such as building a diversified portfolio and being focused on asset allocation. And when setting long term strategic asset allocation bands, an increasingly common question is whether crypto should be part of the asset allocation.

According to research cited by Forbes, 1% of the average family office portfolio is invested in cryptocurrencies, which equates to an average of approximately $11 million of crypto holdings for each office. For those family offices yet to commit to crypto as an asset class, we know that the subject comes up time and again in investment committee meetings.

Industry commentators frequently refer to bitcoin as digital gold, and there are some parallels between the two when you look broadly at the history of money and the evolution of its functions.

About the Authors

Chris Harmse

Chris Harmse

Cryptocurrency & digital financial assets

Chris Harmse is the Co-Founder & Managing Director at BVNK and is an experienced financial analyst and trader who joins the Simple network to share his unique expertise in digital financial assets and cryptocurrency.

Connect with Chris Harmse

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