New Zealand’s KiwiSaver Retirement Fund Adds Bitcoin to its Portfolio

KiwiSaver, a New Zealand retirement savings scheme, appears to have added Bitcoin to its pouch of assets in October 2020. This has added it to the list of institutional investors around the world that are taking on Bitcoin as an asset class.

The scheme, whose portfolio is above $350 million, has dedicated about 5 percent of its entire fund to Bitcoin. According to James Grigor, the chief investment officer at the firm, the similarity between gold and Bitcoin as an investment tool, plus the explosion of the crypto asset popularity as a hedge against inflation was the major reason for allocating its resources to the cryptocurrency.

KiwiSaver first bought Bitcoin in October 2020, when it was at a low of $10,000 a coin, and has reaped a six-fold increase in profits as of the time of writing. Speaking of the rapid price growth, Mr. Grigor said that the fund gives investors and savers access to Bitcoin’s rapid compounding. To him, investors who are happy about gold cannot discount the benefit of Bitcoin.

Bitcoin, like gold, is a scarce investment instrument. The advantage of gold over Bitcoin is that gold’s price is quite stable. Bitcoin has inhibited investments due to its wild volatility, whose 10% increases or decreases per day are not uncommon.

Unlike gold, BTC has a limited supply, making it potentially valuable in the long run. Investing in Bitcoin, in spite of its volatility, has attracted criticism towards KiwiSaver, with some critics saying that the investment is tantamount to gambling.

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