AMP Invests AU$27 Million In Bitcoin: Will Other Big Funds Do The Same?

The Australian Mutual Provident Society's (AMP) move to invest AU$27 million in Bitcoin has made it the first major Australian superannuation fund to dip into cryptocurrency, a market traditionally avoided by large fund managers due to its volatility.

AMP's decision comes as the AU$4 trillion retirement savings industry has largely shunned the asset class, citing concerns over its unpredictable nature.

What about other superannuation funds?

Other major funds have made it clear they will not follow suit. On Thursday, several big funds reiterated their stance, with some citing the views of Reserve Bank governor Michele Bullock, who has stated that cryptocurrency does not have a place in the Australian economy.

AMP's chief investment officer, Anna Shelley, explained that the AU$27 million investment represented just 0.05% of its AU$57 billion in funds under management. The Bitcoin purchase was made in May, when the cryptocurrency was trading between US$60,000 and US$70,000.

Shelley noted that the decision was part of AMP's broader diversification strategy, with Bitcoin selected based on "momentum and sentiment" through the fund's dynamic asset allocation process.

A spokesperson for AustralianSuper confirmed that while the fund was exploring blockchain investments, including small stakes in tech companies, it has no current plans to make direct investment in cryptocurrencies.

Luci Ellis, former RBA assistant governor and now chief economist at Westpac, also shared her concerns about cryptocurrency's role in the economy.

"It doesn't have a stable value, you can't really use it for payments except in very rare circumstances, and it doesn't have a running yield. It's not like equities that entitle you to a flow of dividends, or a bond that entitles you to a flow of interest payments," Ellis said.

Meanwhile, Vanguard, the world's second-largest provider of exchange-traded funds, described the merits of digital assets as "weak" and based on speculation. The company has always pointed to the lack of cash flow and cannot be objectively valued, which makes its current price purely based on speculation, Bitcoin.com reported.

"While many speculators have made money on cryptocurrencies, there are as many if not more who have made a loss. And I suspect a lot more will lose money in the future," said Vanguard's Asia-Pacific CIO, Duncan Burns adding that bitcoin's value has yet to be firmly established in the investment market.

"Hazarding a guess," Burns stated, highlighting that crypto prices are disconnected from any economic fundamentals.