BTC on your APL? Licensees air views on crypto

Despite nearly four in 10 investors holding cryptocurrency, three of Australia’s largest financial advice groups do not offer advice on such products.

Findings from CoreData recently uncovered that just 11 per cent of advice practices include crypto products on their approved product lists (APLs), while the majority (74 per cent) do not include them or advise on them.

This is alongside 38 per cent of Australian investors saying they currently hold crypto investments.

Money Management reached out to the three largest licensee owners in terms of adviser numbers to understand their stance on the evolving asset class.

According to Centrepoint Alliance’s chief investment officer, Daniel Stojanovski, the advice firm does not currently have any direct crypto products on its APL.

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“Centrepoint Alliance does not currently have any direct crypto products approved on our approved product lists (APLs). Consequently, our advisers do not recommend crypto assets for client investment.”

This is echoed by Aman Ramrakha, Entireti’s inaugural CIO who was appointed earlier this year, who told Money Management it is difficult to allocate crypto in client portfolios due to its highly volatile nature and lack of intrinsic value.

“The volatility of cryptocurrency can create a distortive impact to portfolios when allocated alongside traditional asset classes. We view it as a speculative product that is inappropriate for our clients, many of whom are in or nearing retirement,” Ramrakha said.

“As such, Entireti currently does not include cryptocurrency on our APLs as we believe that the risks far outweigh any potential rewards.”

A spokesperson from Count also disclosed to Money Management that it does not include crypto assets on its APL, but did not elaborate further.

While Centrepoint does not hold any direct crypto products, Stojanovski noted that crypto exchange-traded funds (ETFs) are featured on its APL, though they are presently marked as “on hold”.

He explained: “While there are crypto ETFs listed on our APL, such as ETFs from Global X, VanEck and Betashares, these ETF products are currently designated as ‘on hold’, indicating that no new money is permitted, meaning no investment is allowed by the advice network unless formal approval is granted by the licensee.”

Centrepoint’s APL approval process strictly requires products that have achieved either a Morningstar Medallist rating or a Lonsec rating of “Recommended” or higher, he noted.

“To date, crypto products have not satisfied these requirements, leading Centrepoint Alliance to maintain a cautious approach towards crypto investments.

“These products are new to the market, so new or additional investments cannot be made without adviser approval. Currently, these ETFs have an investment-grade rating from Lonsec, but since this rating is not ‘Recommended’ or higher, the default status is ‘Hold’ on the APL. Therefore, by default, no funds can be invested and there can be no existing investment.”

Beyond the advice sector, other financial services names have exhibited similar caution on investing in the asset class.

MLC Asset Management’s chief investment officer, Dan Farmer, said earlier this year that the firm remained in the “not now” – rather than “not ever” – camp regarding bitcoin.

“We continue to lean towards the ‘not now’ to bitcoin camp when considering if bitcoin warrants a place in our diversified portfolios. We continue to keep a close eye and an open mind, and actively monitor the cryptocurrency ecosystem, including regulators’ attitudes,” Farmer commented in February.