The relief and retirement fund administrator worth $5.5 billion revealed that it invested $25 million in cryptocurrencies such as Bitcoin and Ether acquired through the New York Digital Investment Group (NYDIG), a Bitcoin-focused subsidiary of asset management Stone Ridge.
Ajit Singh, the fund’s chief investment officer, said, “I see this as another instrument to manage my risk.” “It has a positive predicted return and manages my risk,” says the investor. Every other asset class has a poor correlation with it.”
According to the National Association of State Retirement Administrators, state and local government pension systems are a major force in investing, overseeing more than $5.5 trillion in assets. Though they’ve been sluggish to join the speculative craze surrounding cryptocurrency as guardians of taxpayer cash, Houston’s move isn’t uncommon. Two Virginia pension funds that began investing in digital assets two years ago have recently announced plans to increase their investments.
With Bitcoin’s fresh gainings, having more than doubled since the start of the year, some institutional investors are reconsidering their stance on the cryptocurrency. The advance this week, which took Bitcoin beyond $66,000, was fueled by hopes that the creation of the first derivatives exchange-traded fund for the currency in the United States would lead to widespread use.
Singh further stated that he preferred direct tokens to take on the risk of futures-related investments. Adding that “We didn’t want to have the artificial exposure which is why we decided to go straight to the token.” Making it evident that as more institutions embrace the technology, supply and demand patterns will get more complex, thereby providing us the ability to generate income in the foreseeable future.
With more than 6,600 active and retired firemen, as well as their family members covered by the Houston fund, active firemen have contributed 9% of their salaries to the fund since 2004, with the city of Houston donating at least double that amount, Singh expressed optimism that the investment will yield high turn-over.
“For quite some time, we’ve been assessing this as a financial asset to add to our equity investment; we’ve been observing and researching it became an asset class we couldn’t afford to overlook any longer,” he said. This acquisition by the Houston Firefighters’ Relief and Retirement Fund (HFRRF) signals the first time a public sector pension plan in the United States has made a cryptocurrency investment.