Investing in Bitcoin Is Like a Venture Capital Play, Virginia Pension Chiefs Say

The strategy has performed well for the investors, who have gained exposure to cryptocurrencies such as Bitcoin through investments in several private equity funds.

He, and his colleague Katherine Molnar, CIO at the Fairfax County Police Officers Retirement System, shared their insights Wednesday during a panel at the 2021 Virtual Chief Investment Officer Symposium.

Several years ago, the pair invested in the Morgan Creek Blockchain Opportunities Fund I, a private equity vehicle that raised $17.1 million from investors in 2018.

That was enough to get the pair to re-up into the same asset manager’s Fund II a year later.

Molnar’s county police retirement system also put another 1% of assets into a separate fund manager called Blockchain Capital for its Fund V, which has a combination of venture capital investments and some liquid cryptocurrency.

The peers have maintained similar asset allocations, preferring risk allocations to capital allocations, meaning the funds have had less equity risk over the years.

Going forward, the asset owners said they will continue to invest in managers that deal with both cryptocurrency and venture capital, rather than investing in each asset class separately.

That set-up has helped them pool their assets—nearly $5 billion in the county employees plan and $1.7 billion in assets in the county police plan—to negotiate better fees from managers.

Working together has also helped the two allocators communicate the investment to their trustees, who were skeptical when they were first considering it in 2018, as the funds were exploring their first investment with Morgan Creek.

By the time the investment chiefs introduced the fund manager at board meetings, the trustees had sat through the same presentations directly from the asset manager.

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