Why 93% of Investors Believe in this Must-Have Asset in a Diversified Portfolio
Fidelity’s report says it all
Ric Edelman: It's Tuesday, May 9th, and we've got a new survey on the level of crypto adoption in the US and around the world. This new survey is coming from Fidelity. They've been doing the survey since 2018 and I guess you might even be asking the question why on earth would Fidelity, one of the largest mutual fund companies in the world with $2 trillion in assets? Why would they be doing a survey on crypto? Because Fidelity has digital assets. They have a crypto account you can open just like the Fidelity brokerage account where you can buy Bitcoin and Ethereum. Yeah, One of the largest financial services companies in America is heavily engaged in crypto, and so they want to know what's going on in the crypto community around the world.
Here are the results of this year's survey. Like every year, they asked about 1000 people in the US, in Europe and in Asia. Surveyed investors, financial advisors and high net worth individuals, family offices, hedge funds, pension funds, venture capital firms, endowments and foundations. This is a pretty broad spread survey. And here are the results. 81% say that they believe digital assets should be a part of a diversified portfolio, and 74% say they plan to invest in digital assets. Already, 58% of institutional investors own digital assets and their rate of investing is growing.
Look at what's happening across the world. In 2019, here in the US, only 22% of institutions owned digital assets in their portfolios. That was 2019, 22%. Today, it’s 42%. It's virtually doubled. In Europe, institutional engagement has risen from 45% to 67%. Worldwide, it's gone from 52% to 58%. In Asia, it's been pretty flat at about 71%.
Now among high-net-worth individuals (people with more than $1 million to invest), 88% of them own crypto. Financial advisors, 76% of them personally own digital assets. Family offices, which are investment management firms catering to the ultra-high net worth - we're talking about people with $20 million or more to invest - more than half of them, 56%, own digital assets on behalf of their clients.
We're also beginning to see adoption by pension funds and endowments and foundations. Not as many of them invest, 7%. But the fact that 7% of them are doing this demonstrates that there's new and growing attention to this asset class.
But here's another hugely important statistic. Fidelity asked among those who are investing in crypto: How much are they investing? What portion of the portfolio are they placing into this new asset class? 93% of them have 5% or less of the portfolio. Only 7% have more than 5% of their assets in Bitcoin or Ethereum or other digital assets.
That's really important. The message is clear. Yes, you probably should have crypto in your portfolio if you want your portfolio to look like professional investors are doing it. And when you do, keep your allocation to low single digits, like a 1% asset allocation as I recommend in my book The Truth About Crypto. Yale says you only need a 2.5% allocation. And a study by the CFA Institute says you only need a 3.1% allocation. Pretty much everybody everywhere who's been studying this and the institutional investors surveyed by Fidelity confirming this are pretty much all in agreement. Low single digits is plenty of an allocation. But at the same time, everyone is also similarly in agreement. The number isn't zero. It's somewhere between 1 and 5%.
So what's your portfolio looking like? Has your advisor recommended an allocation to digital assets? If not, why not? You ought to get more information from your financial advisor about this new asset class, and you need to learn about it yourself. You can read my book, The Truth About Crypto or Take Our Class. Go through our course and get your certificate in blockchain and digital assets.