Why this New Zealand-based retirement fund is investing in Bitcoin

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KiwiSaver, a New Zealand-based retirement savings scheme run by NZ Funds Management, has invested about 5% of its assets in Bitcoin. According to local media, the Funds Management’s KiwiSaver Growth Strategy fund had assets worth slightly more than $350 million as of December last year.

According to news, the Fund Manager updated its “bid papers” in October of last year, enabling KiwiSaver to invest in cryptocurrencies. According to James Grigor, the fund manager’s chief investment officer, Bitcoin has been an asset that many buyers often purchase “as a store of cash in times of economic crisis.” As a result, Bitcoin has properties that are as appealing as gold, according to Grigor, who  added:

“If you are happy to invest in gold, you can’t really discount Bitcoin.”

Orthodox asset classes, on the other hand, “will always” be the asset classes that “compound overtime” to provide individuals with the “best retirement they can get,” according to Grigor. He went on to state that New Zealand Funds’ KiwiSaver was mainly “made up by conventional asset groups,” such as bonds and securities, and said:

“But there’s going to be times when it’s not always going to be plain sailing. You may still have a positive view of those asset classes, but other opportunities present themselves.”

NZ Funds Management has invested KiwiSaver funds in pension funds that invest in Bitcoin, such as US-based Galaxy Digital, a firm that assists major bank Morgan Stanley in providing its customers with access to Bitcoin funds.

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Although Grigor predicted that Bitcoin will be used in more KiwiSaver schemes over the next five years, rival KiwiSaver providers could not allocate their portfolio to the cryptocurrency, citing, among other things, volatility concerns. For example, David Beattie of the financial services firm Booster stated:

“At this stage, we would say, ‘no’ [to investing in Bitcoin] because it’s an investment that doesn’t demonstrate risk-return properties that are acceptable from our point of view. It’s too speculative at this stage.”

Others, such as Sam Stubbs, the chief executive of the Simplicity KiwiSaver programme, believe that Bitcoin inside KiwiSaver is “gambling, not saving.” He was simply “surprised” that any KiwiSaver boss would deem cryptocurrency to be a “legitimate asset class.”

Grigor reported that the company bought $10,000 in Bitcoin in October and that they expect the currency will continue to appreciate in value. However, if they think the cryptocurrency’s upward market momentum has peaked, they can “move on to the next asset class.”

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