NEWS

Allocators Showing Greater Interest in Digital Assets

By David G. Barry

Digital assets are clearly on the radar of institutional investors.
That’s a key takeaway of a survey of alternative investment allocators done by the law firm Seward & Kissel.
According to the results, 41% of those surveyed said they are looking to increase their allocation to digital assets – the same figure who are looking to increase their allocation to private equity. The only investment segment that scored higher was infrastructure at 44%. More noteworthy is that in 2021, just 12% of survey participants anticipated increasing their allocations to digital assets. Also, on the 2022 study, 48% of the participants indicated that their organizations do not invest in digital assets. That’s down from 69% who shied away in 2021.
News of the high interest by LPs in digital assets comes amidst the sector being pummeled. Bitcoin, for instance, is worth less half of what it was valued at six months ago. Additionally, a Goldman Sachs basket of 11 stocks which is tied to crypto pricing is down more than 60% over the last six months.
Seward & Kissell did not say how many people were surveyed but did say that high net worth individuals and family offices accounted for a one-third of the respondents. Funds of funds accounted for 27% while endowments, foundations and non-profits, investment consultants and seeders each represented about 10%.
The survey also is interesting in that 93% of respondents said that investment strategy/process was the number one criterion for selecting a manager. Performance and pedigree were next, with ESG and diversity & inclusion on the investment team given less importance.
You can access the report here: https://www.sewkis.com/publications/seward-kissels-2022-alternative-investment-allocator-survey/.