Hedge fund Marshall Wace plots investments in cryptocurrency companies
The London-based hedge fund group is planning to buy stakes in privately held digital asset companies that are at a late stage in their development.
Marshall Wace is planning a long term crossover strategy to make late-stage venture capital investments in digital finance companies, a person with knowledge of the plans told City A.M.
The new digital portfolio will adopt an approach similar to that taken by Marshall Wace earlier this year when it launched a fund to invest in privately owned healthcare companies pre-IPO, holding on to them after they list.
The $55bn manager will not be trading in cryptocurrencies, but rather companies that provide blockchain technology or payments technology – the “infrastructure” surrounding digital assets, the source said.
Marshall Wace, which is one of the world’s biggest hedge fund firms, has already started building the new digital finance portfolio with an investment into US-based financial technology company Circle.
Circle is an example of a company that issues stablecoins – a type of cryptocurrency whose value is tied to an outside asset, in this case US dollars. Stablecoins are said to be a target area of investment for the firm.
Amit Rajpal, chief executive of Marshall Wace Asia, will lead the launch of the new portfolio, the source said.
The size of the investments is still unclear, and Marshall Wace declined to comment.
Although some investors remain sceptical about cryptocurrencies and digital finance technology, Marshall Wace joins a string of asset managers eyeing up the sector’s future potential.
In January, the world’s largest asset manager, Blackrock, filed with the U.S. Securities and Exchange Commission (SEC) for two of its funds to invest in bitcoin futures. It also joins Skybridge and British fund manager Rugger in investing in the digital asset industry.
Marshall Wace’s move comes after a recent survey by Intertrust found that 98 per cent of hedge fund managers expect to invest in digital assets in the next five years.
The Amsterdam-headquartered trust forecast that around 7.2 per cent of hedge fund assets will be invested in cryptocurrencies like Bitcoin or Etherium by 2026 – what equates to around $312bn in digital currencies.