Ric Edelman is rolling the dice in the cryptocurrency space by investing in and becoming an advisor to Bitwise Asset Management, a leader in cryptocurrency index funds.
Bitwise announced Thursday that Edelman will become an advisor and investor in the company, joining other prominent asset management execs including former Barclays Global Investors’ CFO Alison Davis, former Wealthfront CEO Adam Nash, and current Western Asset Mortgage Capital Corp. CIO Anup Agarwal, among others.
“I’m thrilled to be an advisor to Bitwise and help further its mission to bring institutional-caliber crypto exposure to investors in the U.S. and around the globe,” said Edelman, founder and chairman of Edelman Financial Services, in a statement.
“There is a technological and financial revolution taking place right now with cryptocurrency that has far-reaching implications,” he said. “Every financial advisor needs to educate themselves about this space, and most should be considering an allocation for clients. I look forward to working with Bitwise to help make that a reality.”
The industry, Edelman continued, is “on the path to a cashless future, and the crypto-asset market is simply too big to ignore.”
The “smart contract technology embedded in crypto-assets like Ethereum has the potential to revolutionize huge portions of the financial industry,” he continued. “Financial advisors need to work right now to future-proof their portfolio against the technological changes taking place in the world today. Adding exposure to crypto-assets is part of that effort.”
Bitwise said that Edelman will help the firm in its efforts “to educate and support financial advisors looking to bring diversified exposure of crypto-assets to client portfolios.”
The news comes one day after Chris Dodds — a Charles Schwab director — joined the board of Coinbase.
A recent Bitwise survey of more than 450 advisors found that 83% had received questions from clients about crypto.
The advisors polled said that “education” and “regulatory concerns” were the two primary barriers to them making an allocation to crypto-assets for their clients.
“Ric has dedicated his career to helping investors build better portfolios and prepare for their future,” said Hunter Horsley, Bitwise CEO, in a statement. “We’re thrilled to have him supporting Bitwise’s efforts to make high-quality crypto exposure a part of every investor’s portfolio.”
Bitwise launched the world’s first cryptocurrency index fund, the Bitwise HOLD 10 Private Index Fund, in November 2017.
The fund holds the 10 largest cryptocurrencies selected and weighted by inflation-adjusted market cap, with rules in place to ensure security, liquidity and other safeguards, the company explained.
The fund is available to U.S. accredited investors with a minimum investment of $25,000; an “Offshore” fund is available for international accounts with a minimum investment of $100,000.
For both funds, Investor Class units have a 2.5% management fee, while Institutional Class units (with assets >$1 million) charge a 2.0% fee. Investments can be made through IRAs, trusts, taxable accounts and other entities.
Bitwise states that its research “supports the case for investors making a small but dedicated allocation to cryptoassets in their portfolios.”
From Jan. 1, 2014, through March 31, 2018, a 1% allocation to Bitcoin — properly rebalanced — would have added 4.5% in total returns to a traditional 60% equity/40% bond portfolio without increasing the portfolio’s volatility in a meaningful way, Bitwise said.
“The bitcoin allocation increased the portfolio’s three-year Sharpe ratio by more than 20% at the end of the study,” the company added.
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