Matt Farrell Discusses Crypto and Client Portfolios with ETF.com
October 27, 2021
As affluent individuals become more interested in cryptocurrencies, it is important for family offices to understand how these digital assets can be incorporated into their allocation strategy. To learn more about the role of cryptocurrency in client portfolios, ETF.com spoke with WE Family Offices Senior Investment Manager Matt Farrell for insight.
In the article, Farrell shares how WE Family Offices offers ultra-high net worth clients exposure to cryptocurrencies in three ways: owning actual cryptocurrencies, private market investments into the blockchain infrastructure and through hedge-fund-type vehicles to capture the volatility in digital assets.
Farrell also explained the importance of taking a long-term view when it comes to crypto as well as the importance of education, so clients understand these often-complex assets.
“We advise clients to come in with their eyes wide open; that they should expect volatility and drawdowns, and therefore, we size appropriately,” Farrell explained to the publication. Because of this volatility, we believe investments in actual cryptocurrencies and through hedge holdings should total around 1% of total assets under management and should be paired with infrastructure-focused private investments.
In addition to volatility, another aspect that investors in cryptocurrencies need to be aware of is hackers. Fortunately, managers that can custody cryptocurrencies in an offline storage location can reduce security risks. “You sacrifice a little bit of liquidity, but what you gain is reduced operational risk,” Farrell explained.
This material is distributed for informational purposes only. Opinions expressed herein are subject to change without notice.