Alliance Bernstein has told its clients that bitcoin has a role in investment portfolios. The head of the Portfolio Strategy team of the firm’s research arm said he has changed his mind about bitcoin after previously stating that it did not have a place in investment portfolios.
Alliance Bernstein Recommends Bitcoin Allocation
Alliance Bernstein’s Inigo Fraser-Jenkins reportedly told clients on Monday that he’s changed his mind about bitcoin. Once a bitcoin skeptic, Fraser-Jenkins told clients in 2018 that bitcoin had no place in investment portfolios. However, in a note to clients on Monday, he wrote: “I have changed my mind about bitcoin’s role in asset allocation.”
Alliance Bernstein (AB) is a leading global investment management and research firm with $631 billion in assets under management. Fraser-Jenkins is co-head of the Portfolio Strategy team at Bernstein Research, the research arm of Alliance Bernstein. He began his career at the Bank of England and led Nomura’s Global Quantitative Strategy team prior to joining Bernstein in 2015.
Fraser-Jenkins listed several coronavirus pandemic-driven factors that have made bitcoin an attractive asset to investors, including increased fiscal expansion and the prospects of inflation and tax hikes. He elaborated: “The attractions of cryptos are what also make them potentially an annoyance for policymakers. Cryptos do have a place in asset allocation … for as long as they are legal.”
“The greater role that governments will likely play in economies makes cryptos potentially more appealing,” Fraser-Jenkins opined. “These very same forces also may hinder crypto. If they get in the way of policy implementation, then governments might seek to constrain them.” However, the Alliance Bernstein analyst doubts that governments will ban bitcoin or other cryptocurrencies.
Several other factors have helped Fraser-Jenkins change his mind about bitcoin. For example, he pointed out that bitcoin’s volatility has significantly declined over the past three years, making it a more attractive store of value, and its relative volatility to both gold and stocks has fallen to historically low levels.