Two chief investment officers who were among the first to commit to funds invested in blockchain technology, remain bullish on the digital assets sector, despite the fall in cryptocurrency prices.
“Nothing that we’ve seen over the last six months has shaken us,” said Andrew Spellar, chief investment officer of the $5.1 billion Fairfax County Employees’ Retirement System in northern Virginia.
In 2018, the employees fund, along with a sister pension fund, the $1.9 billion Police Officers Retirement System, committed $10 million and $11 million, respectively, to the Morgan Creek Blockchain Opportunities Fund, managed by Morgan Creek Digital Assets, a subsidiary of Chapel Hill, N.C.-based Morgan Creek Capital Management LLC.
Since then, the two pension funds have made seven additional digital asset-focused allocations, including two in May.
The Fairfax funds recently made two combined commitments of $35 million to funds with yield-farming strategies that focus on digital assets: the VanEck New Finance Income Fund and the Parataxis Digital Yield Fund, managed by Parataxis Capital.
“What we’re primarily interested in is the broader innovation in technology that’s taking place around (cryptocurrencies) and behind it,” Mr. Spellar said.
The employees fund committed $25 million to each fund while the police fund committed $10 million.
VanEck’s fund claims to offer investors “potential lower volatility as compared to direct digital asset exposure,” according to a news release, which Katherine Molnar, chief investment officer of the Fairfax County Police Officers Retirement System, said was one aspect of what made the fund attractive. VanEck’s website said the fund produces income from “short-term lending arrangements with digital asset entities.”
“Importantly, you are not taking directional crypto price risk. So, it’s not a directional bet on any individual token,” Ms. Molnar said.
The Fairfax County funds have entered into a revenue-sharing agreement with Parataxis Capital as well as VanEck, though Ms. Molnar declined to discuss specifics, only disclosing that it’s a “long-term agreement.”
Looking ahead, Ms. Molnar said their outlook is ultimately optimistic and she feels “excited” about “how well some of these more recent funds might do.”
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