Fixed income giant Pimco has dabbled in cryptocurrencies and plans to gradually invest more in digital assets that have the potential to disrupt the financial industry, according to Chief Investment Officer Daniel Ivascyn.
“Now we are looking into whether we could possibly trade certain cryptocurrencies as part of our trend-following strategies or quantum-oriented strategies and then work more on the fundamental side,” said Ivascyn in an interview with Leslie Picker of CNBC for Delivering Alpha. “So this will be a step-by-step process where we’ve spent a lot of time with the internal diligence of speaking to investors. And we’re going to take small steps in an area that is growing rapidly.”
His comments came as Bitcoin hit a new all-time high on Wednesday following the successful launch of the first ever publicly traded US Bitcoin futures fund. It is widely viewed as a landmark for the burgeoning crypto industry that has long been pushing for greater adoption of digital currencies on Wall Street.
The world’s largest cryptocurrency climbed around 4% to $ 66,416.86, beating an earlier record of $ 64,899 set in mid-April.
Ivascyn said some of Pimco’s hedge fund portfolios are already trading crypto-linked securities.
“We act from a relative value perspective. So we’re not taking a directional commitment, we’re trying to take advantage of the mispricing between the cash product, the trust traded on the exchange, and then the futures, ”said Ivascyn. “So that was a starting point for us in a very narrow segment of our business.”
More and more institutions are relying on digital tokens.
Big financial companies like PayPal and Fidelity have taken steps into cryptocurrency while Square and MicroStrategy used their own balance sheets to buy Bitcoin. Morgan Stanley was the first bank to offer Bitcoin funds to its clients, and Goldman Sachs quickly followed suit with its own announcement.
“You need to understand decentralized finance because it will be disruptive and very likely to disrupt our industry, especially our business,” said Ivascyn. The company “is pondering scenarios in which this could lead us to compete to deal with a rapidly changing environment that offers quite a significant value proposition, especially for younger generations or the new generation of the investment community.”
