The majority (92 per cent) of institutional investors agree that digital assets have an important role to play in portfolios, although volatility and security remain key barriers, research from Nickel Digital Asset Management has found.

The survey found that two thirds (66 per cent) of institutional investors believe digital assets role should be moderate in a diversified portfolio.

However, just 32 per cent believe they can play a significant role, while 39 per cent believe they should play a small role in portfolios.

In addition to this, over two fifths (42 per cent) said that crypto and digital assets should only be included for a specific investment angle, although just 7 per cent said they should not be included.

The survey also revealed growing optimism around fund launches in the digital asset sector, as around 62 per cent of respondents expect a recovery digital asset focused fund launches over the next 12 months compared with last year.

Institutional investors also forecast growth in the use of tokenisation of investment funds and asset classes, as around 85 per cent predicted growth in tokenisation over the next three years, with 25 per cent expecting dramatic growth.

However, almost all (96 per cent) of institutional investors said that the backing of a major financial institution is important before they invest, with 57 per cent saying it is very important.

Volatility also remained a barrier to investing in the crypto and digital assets sector for institutional investors who are sceptical.

More than half (51 per cent) who were reluctant to invest cite worries about volatility, while 45 per cent had concerns about security, and 40 per cent were worried they didn't understand the sector.

Just over a third (34 per cent), meanwhile, were concerned about regulation.

Commenting on the findings, Nickel Digital CEO and founding partner, Anatoly Crachilov, said: “Institutional investors and wealth managers are gradually discovering the diversification benefits offered by digital assets in portfolio construction.

“There are a range of views of course on what sort of role digital assets should play with most focusing on a moderate role which tallies with most expert views on how digital assets can support performance.”

Share Story: