Morgan Creek Digital now takes up about 1 percent of the assets of the two pension funds Fairfax Retirement System – the investment has more than doubled since taking their first position in the fund that closed in February.
Two of the three pension funds under the system of Fairfax County, Virginia, Police Officer Retirement System and the Employees Retirement System, invested $ 55 million in funding both Morgan Creek in October.
New allocations come after seeing the initial good results of the first fund, in part because the crypto performance, which makes up 15 percent of the investment Morgan Creek; the majority of the funds are in a position of infrastructure related companies blockchain.
“Final close to the fund only in February this year, and it is a short time period is recognized,” Katherine Molnar, chief investment fund police officers, to CoinDesk.
“It went well, and part of it is due to the decision of Morgan Creek’s how they’ve time to buy bitcoin. The liquid portion of the fund has performed quite well based on how they have time to lean on the portfolio. ”
the police officer pension funds accounted for $ 22 million of investment while county employees fund put up $ 33 million. Molnar said $ 50 million of investment went to both the increase in funds while $ 5 million is a separate co-invest in a project-specific confidential under Morgan Creek.
The numbers represent about 1.5 percent of the 2018 total assets of the fund police officers and about 0.8 percent of the total assets of the fund that district employees are from the same year. For context, both pensions are usually put up about 2 percent of their assets in new investment.
This time, convincing the board to re-up investment was easier than taking an early stake.
“We didn’t have to do a lot of extra explanation or discussion, and people are generally pleased with the way the performance is off to a good start. It was a much easier legal process because the lawyers did a good job on the first contract. “
Dana Morgan Creek are marked as private equity venture capital fund, and replacement of small capitalization US equity funds in their portfolio – one of the higher returns and higher risk portion of pension fund investments.
While part of the funds Morgan Creek crypto Digital is performing well, CIO pension funds disclose blockchain most attractive side of Morgan’s Creek, which makes up 85 percent of the fund.
Andy Spellar, chief investment officer of fund employees, said CoinDesk:
“Think about every time you go to buy a property and refinance – you have to pay title insurance for someone to figure out if there’s a lien against your property. If the ownership of your property is digitized and transferred instantly, in the way that this is done in a day, title insurance goes away. “
Pension funds suffered from low interest rates, a venture capital fund of funds technology becomes more interesting trying to meet their targets back, Spellar added.
“It’s a problem across the board for everyone,” said Spellar. “The interest rate is the main component of the total return from time to time.”
Because all assets are priced off of cash, cash low rate affects the price of every other asset classes, Molnar added. It has yet to convince the two funds to invest in pure crypto-focused funds, however.
“We’re not doing this for crypto exposure, but we get some of that, and it was by far showed some uncorrelated behavior relative to other asset classes,” said Spellar. “Honestly it was very early in the life cycle that I do not have a good idea whether that will hold up or not.”
Spellar, in general, see the kind of disruptive technologies as a hedge against traditional investments.
“We were looking for a disruptive innovation – something that can negatively correlated with other things on our own,” said Spellar. “So if we have a group of banks, this is a way to hedge against a monolithic and slow the process of moving them.”
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