Licensees reluctant to hold crypto on APLs
Only 11 per cent of financial advice practices include crypto products on their approved products lists (APLs), according to CoreData.
Research by the organisation found 11 per cent do include them, 74 per cent do not include them on their APL or advise on them, and 6 per cent may do so in special instances.
However, it also found 38 per cent of investors say they hold crypto, which presents a dilemma where advisers cannot help them with their exposure.
The volume holding the assets was beyond the expectations of advisers who predicted less than 5 per cent of their client base would hold exposure.
“With crypto rarely included on APLs, most advisers face significant limitations when discussing it with clients. This leads to a situation where investors are unable to get advice on crypto assets, despite over a third now holding them,” CoreData said.
While they may not be allowed to provide advice professionally on the products, 21 per cent of advisers surveyed said they invested in crypto on a personal level and 13 per cent would consider investing in it in the future.
But the proportion of advisers who are averse to the asset still dominates, with 58 per cent saying they have no intention to hold crypto.
Last week, Damien Hennessy, head of asset allocation at Zenith Investment Partners, said the research house dislikes the limited history available to understand their long-term behaviour and believes it acts as a “risk-on” asset.
Speaking to Money Management’s sister title InvestorDaily, he said: “So if you’re buying it and putting it in a portfolio as a diversifier, I think you’re just misleading yourself. If you’re putting it in the portfolio as a bit of juice for a return in good times, then go for your life.
“But that wouldn’t be something that we’d put in portfolios. We don’t think it has a role.”
Similarly, MLC Asset Management’s chief investment officer, Dan Farmer, said the firm is currently holding off investing in cryptocurrency in its managed portfolios.
“Bitcoin is impossible to value by any orthodox standard. It produces no cash flows, and its value is simply determined by what someone is willing to pay for it, on the expectation of the price rising in future. Said differently, bitcoin remains a poster child of speculation.
“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.”
AUTHOR
Laura Dew
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