Michel Lee, CEO of HashKey Group, explains the role of digital assets in investment portfolios, emphasizing that their significance for returns or diversification varies depending on the type of institution. Drawing on his 25 years of experience with global investment banking giant UBS, Lee shares insights into different institutional strategies:
“Family offices aim for long-term capital preservation and growth, ensuring they don’t miss out on significant upside,” Lee says.
“Smaller hedge funds, more trade-oriented, seek alpha in fluid and volatile markets. Being nimble and responsive allows them to profit, which makes them attractive compared to larger, more aggressive funds historically.”
“Large hedge funds, due to regulatory burdens or compliance advice, act slower despite their interest. Managing significant allocations proves costly. Yet, we see larger funds now entering the market,” he adds.
Lee notes many investors still enter digital asset markets through purchasing Bitcoin and other cryptocurrencies.
“For asset managers, holding Bitcoin proves challenging due to custody and fund administrator readiness issues. Thus, using futures as proxies for cryptocurrency holdings gains popularity,” he explains.
“A family office eager not to miss out may go through this process, opening accounts with providers like HashKey Group. Some smaller hedge funds may do so too, but not typically larger funds.”
“Traditional institutional investors like university endowments enter via direct investments in private equity projects, token projects, or funds. They avoid Bitcoin trading themselves, preferring experts to manage allocations,” he continues.
Lee highlights blockchain technology’s advancement, which broadens access to digital assets.
“Blockchain applications will onboard more assets, surpassing current numbers. DCEP technology facilitates various assets’ easier blockchain trading. While existing stocks and bonds may migrate, they already benefit from traditional finance well. Expect many other assets to come online,” Lee concludes.
