Bitcoin investment by Houston Pension Fund proves cryptocurrency isn’t only appealing to individual investors. With volatile prices for some coins, cryptocurrency is attracting attention from institutional investors. The recent Bitcoin Investment by a Houston Pension Fund is turning heads. Now, more large American pension funds are starting to consider the unregulated asset as a potential asset class. The Houston Firefighters’ Relief and Retirement Fund, has $5.5 billion in assets for more than 6,600 active and retired firefighters and their family beneficiaries. Recently the fund’s investment managers invested $25 million in a combination of Bitcoin and Ether. It did so through NYDIG, a subsidiary of asset manager Stone Ridge. The Bitcoin investment by the Houston Pension Fund was reported by BenefitsPro.
Since 2004, active firefighters have contributed 9% of their earnings to the pension fund, and the city of Houston contributes at least twice that amount.
State and local government pension funds manage more than $5.5 trillion in assets, according to the National Association of State Retirement Administrators. That makes them a formidable force in investing, especially when it comes to cryptocurrencies. While pension funds have lagged the pack in getting into cryptocurrency, the Houston pension fund isn’t the first to do so. Two Virginia pension funds that purchased these digital assets two years ago have said they intend to up their investments by $50 million, according to BenefitsPro.
At the time of writing, Bitcoin was trading at $62,405—off its all-time high of $66,900 reached on Oct. 20, 2021. The cryptocurrency has more than doubled in price since the beginning of 2021 and continues to rally as enthusiasm grows for the asset. In addition, a new futures exchange-traded fund (ETF) has fueled optimism that cryptocurrency asset class will be more widely accepted.
Ajit Singh, the Houston pension fund’s chief investment officer who was quoted throughout the BenefitsPro article, views cryptocurrency assets like Bitcoin as another tool in his arsenal to help manage risk. Digital assets currently display a low correlation to every other asset class. Bitcoin and cryptocurrencies are assets that pension managers have a difficult time ignoring. Given Bitcoin’s performance and the overall recent uptake of cryptocurrencies by both individual and institutional investors, Mr. Singh said he is confident the Houston fund’s investment in the asset class will pay off.
As for workplace retirement funds like 401(k) plans, there are a few providers that offer Bitcoin as an investment option. One offers a turnkey cryptocurrency plan. Currently, most employer-sponsored retirement plan participants must invest in cryptocurrencies via a self-directed brokerage option, if offered in the plan. Individual retirement accounts (IRAs) are another way for many individual investors to include Bitcoin and other types of cryptocurrency in their portfolios. Retirement plan sponsors and committees who are considering adding cryptocurrency to their investment lineup should consult with a knowledgeable and reputable advisor. This may be someone different than a traditional financial advisor. It also makes sense to consult an ERISA attorney. The attorney can help the investor, to weigh the risks and fiduciary obligations associated with the offering. Even after the Bitcoin Investment by the Houston Pension Fund – this is still widely considered a speculative asset class inside of a 401(k) plan.
