Despite warnings from UK’s Financial Conduct Authority (FCA) that investors could lose their entire cryptocurrency holdings, leading investment firm, Ruffer Investment, has hailed Bitcoin and defended its $750 million allocation to the digital asset.
In a recent note to investors, cited by Portfolio Adviser, Ruffer noted that its Bitcoin purchase was a “small allocation to an idiosyncratic asset class which we think brings something significantly different to the portfolio.”
It can be recalled that the asset manager had earlier exposed 2.5% of its portfolio to Bitcoin. Ruffer in its note gave several reasons why Bitcoin is becoming an attractive investment class. According to them:
Due to zero interest rates, the investment world is desperate for new safe-havens and uncorrelated assets. We think we are relatively early to this, at the foothills of a long trend of institutional adoption and financialization of bitcoin.
Reacting to the warnings from the FCA, Ruffer opined that the “bad reputation” of cryptocurrencies should be viewed as a “risk premium.” On the flip side, the firm admitted that it could be wrong and lose money in the process. And this is why it has kept its exposure to a small but meaningful size. This is in line with the basic investment rule – “invest only what you can afford to lose.”