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Add Crypto to Investment Portfolio: Enhance Return, Reduce Risk/Volatility


As an emerging asset class, cryptocurrency and blockchain technology related investments are gaining begrudging respect among finance professionals. Market slides aside for the moment, a study released by Grayscale Investments attempts to make the case investors should seriously consider adding crypto to their respective portfolios, as they bring better returns and, counterintuitively, reduce risk and volatility.

Grayscale Urges Modern Investors to Incorporate Crypto into Portfolios

Granted, it's a strange time to be making such an argument: crypto markets as of this writing are bloody, and one only need cruise over to Satoshi Pulse in order to see the carnage. Nevertheless, Grayscale Investments (GI), a major player in the ecosystem as it relates to mainstreaming crypto in the broader world of finance, released, A New Frontier:
How Digital Assets Are Reshaping Asset Allocation by Matthew Beck.  

It's a bold attempt to persuade modern investors of the need for cryptocurrency, and their related offspring, in any balanced portfolio. They "view digital assets as a brand new asset class that can enhance strategic asset allocation and help investors build portfolios with higher risk-adjusted returns. We will provide a few different lenses through which the reader can gain a deeper understanding of the role that digital assets may play in building more efficient portfolios."

Add Crypto to Investment Portfolio: Enhance Return, Reduce Risk/Volatility

Throughout the paper, Mr. Beck refers to the crypto phenomenon as "digital assets," which he believes "provide exposure to unique market opportunities and risks, thus creating a diversifying return stream for investors. As such, they should be considered a component of the optimal beta portfolio alongside traditional assets such as equities, bonds, and real estate."

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