German spezialfonds expected to allocate to crypto in next two years

Thirty per cent of pension funds, wealth managers and other institutional investors believe that over half of German spezialfonds will allocate to cypto in the next two years, according to a survey by Nickel Digital Asset Management.

Last year, Germany introduced the Fund Location Act, which allows specific funds, ‘spezialfonds’, (open-ended domestic special AIFs with fixed investment terms) to allocate up to 20 per cent of their assets under management to crypto/digital assets.

On the back of this, Nickel’s survey also found that over the long-term, 78 per cent of the survey respondents expect the spezialfonds to allocate over USD 100bn to crypto and digital assets – at least 5 per cent of their of their combined assets, which are around USD 2trn.

The survey of 200 professional investors from across seven countries including Germany, who collectively manage around USD 329bn in assets, reveals 30 per cent believe between 25-50 per cent of spezialfonds will allocate to digital and crypto assets between now and 2024. Only 14 per cent anticipate that less than 10 per cent of these funds will do so.

The Fund Location Act states that spezialfonds can allocate up to 20 per cent of their assets to digital and crypto assets, and 22 per cent of professional investors surveyed by Nickel Digital believe they will allocate less than 5 per cent over the longer-term. Some 19 per cent believe they will allocate between 2-5 per cent, but 78 per cent expect them to allocate a higher percentage of their portfolios to digital and crypto assets.

Nickel Digital managing director - institutional sales, Fiona King, said: “Germany has been moving swiftly to legitimise digital assets, and the passing of the Funds Location Act last year is just one example of this. Germany has taken a global lead in embracing the new asset class.

“Our research shows professional investors expect spezialfonds to capitalise on the Fund Location Act and start allocating to digital and crypto assets. This will provide a further strong endorsement for digital and crypto assets and lead to more professional investors allocating to this new asset class for the first time or increasing their existing exposure.”

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