Cartwright, an independent business and specialist pension scheme advisor, urges UK institutional investors to embrace Bitcoin following the nation’s first allocation to a defined benefit (DB) scheme.
Cartwright’s New Allocation Strategy
In its announcement, Cartwright, specializing in defined benefit and hybrid pension schemes, emphasized the significance of incorporating Bitcoin into retirement plans.
The firm recently advised its first scheme on a 3% Bitcoin allocation, which aligns with its long-term investment strategy while prioritizing “robust risk management” at both the asset and scheme levels.
Sam Roberts, Cartwright’s director of investment consulting, highlighted the growing trend among trustees to seek new solutions that can future-proof their pension schemes amid economic uncertainties:
This Bitcoin allocation is a strategic move that not only offers diversification but also taps into an asset class with a unique asymmetric risk-return profile… Integrating Bitcoin into a pension scheme’s investment strategy is a bold step that reflects the forward-thinking nature of the trustees involved.
Roberts underscored that while Bitcoin presents significant potential upside, it also requires careful management of associated risks. “Our approach ensures that schemes can benefit from the significant potential upside while limiting the potential downside,” he explained.
Bitcoin In Pension Plans
Steve Robinson, Cartwright’s head of investment implementation, elaborated on the operational procedures for Bitcoin investments. He noted that these procedures have been tailored to maximize the security of the asset while enabling swift profit-taking:
Our commitment to engaging with emerging innovative technologies ensures that trustees remain at the cutting edge of investment solutions.
By combining a secure custodial solution with mechanisms to capitalize on profits quickly, Cartwright aims to make Bitcoin accessible to risk-averse pension schemes.
The low minimum investment threshold will reportedly allow a wider range of pension schemes to participate, contrasting with traditional investment ideas that often require substantial capital.
The firm said it is also optimistic that this strategic move will inspire other institutional investors in the UK to follow suit and explore the benefits of BTC.
Robinson concluded that this approach will provide long-term value to scheme members while reducing the reliance on employer contributions, ultimately enhancing the sustainability of pension funds in an evolving economic landscape.
Despite these moves by pension funds worldwide to invest in Bitcoin, the largest cryptocurrency on the market was trading at $67,760 at the time of writing, reflecting the volatility experienced in recent days ahead of the anticipated US presidential election on November 5.
Featured image from DALL-E, chart from TradingView.com