Endowment funds owned by some of the most renowned universities in the U.S. are increasingly choosing to include cryptocurrency investment in their portfolios as they go after alternative investments. The move toward crypto investment is being led by Yale University, which recently revealed that it plans to expand its alternative investment holdings to 60 percent of its portfolio by 2019.
Universities Take the Plunge
Early in June this year, John Lore, founder of Capital Fund Law Group attested to the increasing interest of academic institutions in cryptocurrency funds.
Speaking to Business Insider, he explained:
We’re seeing some academic institutions getting involved on a limited basis for strategic reasons... I can’t say the names of [the academic institutions] because that’s attorney client but we have people mostly on the East Coast that have begun doing investments in this place on a fairly modest basis
Yale’s recent announcement caused a stir in the industry, coming against a backdrop of reluctance by institutional investors to commit capital into cryptocurrency markets. David Swensen, Yale University’s Chief Investment Officer, who manages their $29.4 billion endowment fund. is the man behind the move. Also referred to as Yale University’s “Warren Buffet”, he is known for making bold calls, and has already invested in two crypto funds fronted by Paradigm and Andreessen Horowitz.
Most recently, The Information, citing an unnamed source familiar with the matter, reported that five other prestigious universities have also take the plunge by investing in cryptocurrency funds in addition to Yale University. These include: Harvard University, Stanford University, Massachusetts Institute of Technology (M.I.T.), Dartmouth College and the University of North Carolina.
Move by Universities Could Herald Coming Major Shift
As with Yale, all of these universities have invested undisclosed amounts in at least one crypto fund from their respective endowments. According to the source this is a sign of the asset class’ growing acceptance among institutional investors. This transition may portend good things for the cryptocurrency market by setting a trend for institutional investment to follow..
Jon Victor, a journalist with The Information explains:
A move by endowments into funds that will directly bet on cryptocurrencies signals a major shift in investor sentiment toward the asset class, in the same way that institutions over the past decade become more willing to invest in private tech companies. Backing from such closely watched institutions could help validate cryptocurrencies, which are still considered too risky by many institutional investors