'The latest fad'
The survey also asked respondents about risk appetite since the onset of the Covid-19 pandemic. The 600 advisers surveyed across Europe are responsible for approximately €400bn (£336bn) in assets under management.
Almost half (47 per cent) of advisers across Europe stated their clients were looking for riskier investments, perhaps driven by rising inflation and low interest rates.
Yet in the UK, 52 per cent said appetite for risk was unchanged, while 27 per cent noted an increase in demand for riskier investments.
Jason Guthrie, head of digital assets at WisdomTree, said: “Cryptocurrencies are a young asset and can be used for different roles in different portfolios. Categorising all assets in the same way ignores the nuances and different use cases of coins, mega cap coins like Bitcoin and ether are very different to the wide range of altcoins available on the market."
Guthrie explained that in the EU, advisers are providing access to cryptocurrency exchange traded products (ETPs) and keeping clients ‘on their books’, although the UK was not there yet.
He said: “If clients are willing to step outside of their adviser relationship, the best thing an adviser can do is get up to speed on the asset class and guide them on their journey into cryptocurrencies, as this will minimise capital risk. Risk management and education should be a priority, especially with such a nascent and fast-moving asset.”
But Barefoot disagreed as he said crypto does not play a role in a portfolio and if it were to be “the new-world”, then he would expect future businesses to create operations that embrace this in an efficient manner.
“Those businesses that are successful in doing so would inevitably rise up the stock market listings as it gains traction – leading to the company itself directly being a part of the client’s wealth that has exposure to small companies within the portfolio.
“If crypto progresses beyond this, these smaller companies will either be acquired by larger institutions, or grow themselves to this level – again, leading to clients gaining increased exposure as such companies grow.
“But, if crypto is just the latest fad, such companies won’t reach the index listing to warrant an indirect placement in the client’s portfolio. That’s a benefit of owning equity indices.”
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