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$631 Billion Investment Giant: Cryptocurrencies ‘Have a Place in Asset Allocation’



Inigo Fraser Jenkins, Co-Head of the Portfolio Strategy team at Bernstein Research, the research arm of global asset management firm AllianceBernstein (AB), reportedly has notified the firm’s clients via a research note that cryptocurrencies “do have a place in asset allocation.”

Before joining AB in 2015, Fraser Jenkins “led Nomura’s Global Quantitative Strategy team.” He started his career at the Bank of England. He holds a BSc in Physics degree from Imperial College (University of London), an MSc in History and Philosophy of Science degree from the London School of Economics and Political Science, and an MSc in Finance degree from Imperial College (University of London).

AB, which was founded in 1967, is an asset-management and research firm with $631 billion in assets under management (AUM) as of 30 September 2020. It has 3,869 employees in 51 locations, and it serves investors in 26 countries and jurisdictions.


According to a report by Coindesk that was published on Monday (November 30), in a research note for clients that Coindesk has seen, the AB strategist said AB had previously ruled out Bitcoin as an investable asset in January 2018.

In fact, on 16 January 2018, in an AB blog post titled “Will Blockchain Stand the Test of Time?”, Paul Robertson said that although blockchain technology “represents an exciting new frontier,” cryptocurrencies’ “value proposition seems more elusive.”

Robertson went on to say:


“Cryptocurrencies seem to have significant shortcomings as potential stores of value… the use case argument is not compelling. Nor do they generate any income for their holders—which rules out discounted cash flow analyses. Lastly, unlike gold or art, cryptocurrencies lack a tangible presence, let alone any aesthetic or cultural appeal. Until cryptocurrencies have established strong track records as stores of value, investors should be wary of embracing them for this purpose…

“Even advocates can’t agree on how cryptocurrencies should be valued, as dramatic price volatility has made the idea that they are ‘currencies’ less credible.”

Then, roughly a year later (on 28 January 2019), Robertson said in another AB blog post that AB’s view of cryptocurrencies had not changed.


Robertson wrote:

“While the final chapter on Bitcoin and other cryptocurrencies has yet to be written, we still struggle to size up their worth. Why? Because they don’t fit the criteria investors have historically used to determine value. For instance, unlike other assets, cryptocurrencies lack a compelling ‘use case’…, fail to generate a stream of cash flows (as with stocks and bonds, businesses, and real estate), and hold no aesthetic or cultural appeal (like art or precious metals).”

However, in AB’s latest research note, Fraser Jenkins admits that “cryptos do have a place in asset allocation… for as long as they are legal!”


According to the Coindesk report, Fraser Jenkins said that currently Bitcoin’s lower price volatility “makes it more attractive both as a store of value and as a medium of exchange.”

Apparently, he wrote:

“From a narrow empirical point of view the downward shift in [volatility] of bitcoin makes it more desirable but its increased correlation points the other way.”


As for Bitcoin’s role as an inflation hedge asset, he said “the driver of bitcoin is similar to that as for gold,” even if it may not “exactly move in a way that would counteract inflation in a given fiat currency.”

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