Wells Fargo plans to adopt an actively managed cryptocurrency strategy for qualified investors, according to Wells Fargo Investment Institute President Darrell Kronk.
Wells Fargo Wealth & Investment Management Investment Research has been looking for a “professionally managed solution” for several months now. However, he is now in the final stages of his managerial research and due diligence process. According to Kronk, this strategy will likely be added to the platform by mid-June.
As one of the largest asset managers in the United States, Wells Fargo Wealth & Investment Management controls nearly $ 2 trillion in assets.
Kronk's view
While Kronk was previously wary of cryptocurrency integration, he saysthat this space has developed and matured enough to "become a viable investment asset." He said that 9000 cryptocurrencies with a market value of over $ 2 trillion illustrate this point.
However, Kronk believes that cryptocurrency is not for everyone. “In our work, we still do not assume that this is a separate asset class with a strategic allocation in each portfolio,” he said. He also emphasized that the cryptocurrency is still developing as an asset, considering it as an “alternative investment”. Therefore, any investment requires more thorough scrutiny.
However, Kronk noted that the cryptocurrency would be “a good portfolio diversifier” for interested qualified investors. In addition, he referred to "good academic and money management work" in relation to cryptocurrencies. He believes that people will become more familiar with them, and, as a result, their price will naturally rise.
This belief in its possible mass adoption is also driven by the steadily decreasing volatility of cryptocurrencies. Wells Fargo analysts noted that the annual volatility in the cryptocurrency index they created was 160% between July 2010 and August 2015. However, according to their report, from August 2017 to March 2021, it fell by half, to 80%.