As blockchain and cyber assets are gaining momentum, still lots of people find it challenging to get exposed to them. However, financial firms have already understood that and currently are trying to bring people closer to these perspective investments. But there are risks for newbie investors, experts warn, especially, if they pile all the funds, they have into these phenomena.
It is Not The Time to Ignore Blockchain
Recently, Morningstar held an investment conference, at which the firm’s senior equity analyst Jim Sinegal said that DLT has the potential to destroy the current state of the financial world, which means that it can disrupt various kinds of economic activities. Also, he said:
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“Ignoring blockchain today is like ignoring the internet 30 years ago.”
Interestingly, as there were both winners and losers at the dawn of the Internet development, there will be such when it comes to the blockchain.
“We’re going to see a lot of successes and failures, things that happen in 2018, 2019 that don’t necessarily reflect on the entire future of blockchain and decentralized technology,” Sinegal added.
At present, lots of common financial firms are brainstorming about how to integrate the access to blockchain technologies. Nevertheless, at the same time some investment experts remain cautious, CNBC reports.
Novel Investment Perspectives, But Suspicious Ones
As Morningstar’s senior analyst on alternative strategies Tayfun Icten has said, currently, there are nearly 10 funds which offer some exposer to DLT. Among them, there are mutual funds as well as exchange-traded ones.
The US SEC has not issued a permit to these funds to straightforwardly pile into such cyber assets as bitcoin, the analyst emphasized. Icten even hesitated whether to quote any of them or not, but he has made it clear by explaining that Morningstar has neither rated them nor covered.
The official representative of another fund research firm Lipper said it does not even trace funds which expose their clients to the blockchain.
As per Icten’s words, these firms on the whole pile money into tech trend which keep emerging, among which there also is DLT. However, they haven’t grown considerably regarding asset size yet, neither are they experimental at the core.
CNBC reports that apart from rising technologies, such funds also pile into major companies that deal with blockchain directly, including IBM and Overstock.com. The former is putting efforts in becoming a pacemaker when it comes to DLT, whereas the latter accepts merely BTC as a payment method.
But the issue is that people who invest in these funds (both directly and indirectly) might not indeed understand whether the firms are genuine DLT bets.
Indirect Investment: BTC-Based Futures
Despite anything, on the horizon, there has appeared at least one firm which would gladly experiment with this kind of investments – indirect investments. And it’s TD Ameritrade.
According to this firm’s chief market strategist JJ Kinahan, TD Ameritrade listed its own BTC-based futures almost instantly once American regulators gave the green light to a novel kind of forward contracts.
Kinahan, however, warned that bitcoin futures are not for everyone as they require an investor to buy an asset at a predetermined future price and date, and that might be risky.
According to CNBC, lots of financial experts remain cautious and urge people to be so. The head of outlining at Creative Financial Concepts in New York David Mendels, in particular, said:
“The technology is very interesting and is very likely to have a dramatic impact on a host of different things. The problem with the funds is nobody really knows what’s going to work. It’s sort of like the early days of the internet. You might end up with Amazon, or you might end up with Pets.com.”
So the old maxim “never invest more than you can afford to lose” is still valid.
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