Germany’s $500-billion asset management giant seeks Bitcoin exposure to several funds

  • Union Investment will make crypto investment provisions to its existing funds without compromising the risk profile.
  • Other fund managers in Germany are also focusing on crypto-focused offerings amid new laws.

Germany’s $500-billion asset management giant Union Investment is looking for Bitcoin exposure to several of its funds. This also comes as part of institutional client offering by the asset manager.

Interestingly, Union Investment has already conducted a pilot test with Bitcoin certificates earlier this year. Thus, it introduced crypto assets in a mixed fund for the very first time with only 1 percent exposure to Bitcoin. “These were Delta 1 certificates in the PrivatFonds Flexibel Pro,” reports Bloomberg.

Last month itself, German regulators introduced crypto favourable laws under the Spezialfonds category. These laws allow institutional players to hold up to 20 percent in crypto.

Read More: Germany allows institutional funds to invest up to 20% holdings in crypto starting next week

However, Union Investment is seeking to gain small exposure, to begin with. In an interview with Bloomberg News, the company’s portfolio manager Daniel Bathe said:

We are considering adding bitcoins in small amounts of 1% to 2% maximum to a handful of other funds for private investors. Bitcoin are well suited for the diversification of portfolios, because in the long term they often have no correlation to classic asset classes such as stocks or bonds.

Bathe clarified though that his company is not launching any new funds. Rather they are just making provisions to add crypto assets, in small amounts, to the existing funds. Furthermore, they won’t be tapering the risk profile of the existing funds.

In the U.S. several institutional funds are already holding Bitcoin and seeing it as a store of value. Bathe added: “We are observing that this trend is increasingly coming to Europe as well. We want to be prepared for that”.

An institutional uptick in crypto investments in Europe

Union Investment getting into crypto is a big move and can fuel Bitcoin and crypto adoption in the European continent. As of June 30, Union Investment has $500 billion in net assets under management making it Germany’s largest asset manager. Similarly, German securities broker S Broker also announced a suite of crypto-focused offerings recently.

It allows its customers to invest in digital assets and blockchain technology through ETFs, 40 certificates, and other individual stock offerings. Germany’s crypto landscape is evolving and we will see the same across Europe. Sören Hettler, an analyst at DZ Bank belonging to the cooperative sector said:

A simplified entry into the market segment for institutional and private investors is a development that has been emerging for some time and is considered to be an important influencing factor for the Bitcoin price gains between autumn 2020 and the beginning of this year.

However, Hettler also warned of the risks that come along with crypto exposure. The crypto market is currently brewing with optimism amid Bitcoin and altcoins making solid gains.

Bitcoin has bounced back strongly from its July 2021 lows of under $30,000. In the last 50 days, Bitcoin has gained more than 66 percent. As of press time, BTC is trading at a price of $52,637 and a market cap of $990 billion.

About Author

Bhushan is a FinTech enthusiast and holds a good flair for understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his free time, he reads thriller fictions novels and sometimes explores his culinary skills.

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