At a time when an increasing number of investors and financial advisors are considering adding Bitcoin to investment portfolios, FTSE Russell has examined how it has behaved within a blended index portfolio. Our recent research paper, "Taming Bitcoin’s mood swings," examines a number of hypothetical historical scenarios for a portfolio blending Bitcoin with other major asset classes.
In two examples, adding a small allocation to a US large-cap portfolio, as reflected by the Russell 1000® Index, and rebalancing on a quarterly basis, resulted in volatility and maximum drawdowns comparable to those of the Russell 1000 but with excess annual returns over the last five years.
Martin Howard, head of Digital Asset Research, FTSE Russell:
“As digital assets such as Bitcoin become more accessible and financial advisors and investors begin to examine this asset more closely, market volatility is often seen as a primary concern. However, when combined with other major asset classes, many investors are finding it can be possible to mitigate digital asset risk using well established and straightforward portfolio construction techniques.”
Tyrone Ross, CEO & co-founder, Onramp Invest:
“The global markets are rapidly changing, and financial advisors have a much broader set of opportunity to offer their clients, particularly with the growth of digital asset markets like Bitcoin. However, this choice and excitement can lead to confusion and concern without a solid benchmark for context. FTSE Russell’s recent research helps illustrate the value of blending traditional and alternative asset classes in a long-term portfolio.”
And you can go to the FTSE Russell website for more information on digital asset data resources from FTSE Russell indexes.
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