The Wells Fargo Investment Institute is reportedly planning to evaluate and onboard an actively managed cryptocurrency strategy to its platform for qualified investors, according to the institute’s president Darrell Cronk.
Cronk, speaking to Insider, revealed the institutional heavyweight is recognizing cryptocurrencies as an investable asset. The “professionally managed solution” to invest in cryptocurrency has been in the works for months and is now in its final stages of research and due diligence.
The strategy could be added to the platform by mid-June, Cronk added. Wells Fargo Wealth and Investment Management includes Wells Fargo Private Bank, Abbot Downing, and Wells Fargo Advisors and oversees nearly $2 trillion in assets, making it one of the largest asset managers in the United States.
The active strategy is expected to be available to qualified investors – those with an annual gross income above $200,000 or a net worth of over $1 million.
As insider reports, Wells Fargo Investment Institute was, not too long ago, wary of the regulatory vagueness surrounding the cryptocurrency space. It did not have an official recommendation on cryptocurrencies, and clients could not bet on cryptocurrency through its platform.
Its stance changed as it believes “the cryptocurrency space has just kind of hit an evolution and maturation of its development that allows it now to be a viable investable asset.” To Cronk crypto is, however, an “alternative investment” rather than a “strategic allocation.”
So we’re still not suggesting in our work that it is its own dedicated asset class with a strategic allocation to it in every portfolio. For those investors who qualify and have an interest, there’s some good academic and money-management work to suggest that it can be a nice diversifier to portfolio holdings.
Per his words, there has been “quite a bit of interest” from clients, but as the topic is complex there’s “a lot of education and informational work that has to be done” to ensure investors understand what they’re betting on.
Wells Fargo’s research team noted that cryptoasset prices are up over the last few months, despite the recent sell-off they endured. Their annualized volatility has also plunged, as a cryptocurrency index the team created saw its volatility drop from 160% between July 2010 and August 2015 to 80% between August 2017 and March 2021.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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