As a newly-born blockchain investment banking community, Banca has gathered top asset management talents from Wall Street, together with many asset allocation models and trading models they have cumulated over the years. After a recent research on historical performance of crypto assets, the Banca team thinks global investors are still below optimal allocation when crypto assets are considered and large growth potential still exists. This will bring substantial future activities to Banca community and, in turn, Banca token.
According to the analysis of Pitchbook, a well-known PE media, from August 2010 to October 2017, Bitcoin has returned to its investors an averaged 298% per year, comparing to the 14.5% annualized return on US large cap stocks, while the latter was considered to have experienced a long bull market. In addition to this, Hedge Fund Research, known for its tracking of global hedge fund performance, has initiated a new index on hedge funds that invest solely in crypto assets as the market develops. In the first three years since its inception, the new index has recorded a stunning 401% annualized return with a Sharpe ratio as high as 4.06, showing that even after considering the notoriously high volatility, crypto investments look very attractive comparing to traditional asset classes including stocks, bonds, commodities and alternative investments such as traditional hedge funds.
The modern portfolio theory widely used by global institutions indicates that long term asset allocation should be driven by risk adjusted returns on various asset classes and the correlation among them. That said, crypto asset with its super high risk adjusted return is still below optimal allocation level. The reason for this is relatively low participation from traditional investment institutions as the total size of global crypto market is not large enough for any large institution to effectively allocate more than USD 100 million of assets. Also, most traditional institutions are very conservative and tend to move gradually in what might turn out to be a brand-new business line.
Banca believes that, as crypto asset explodes in recent years, even if returns eventually come back to more normal levels, crypto assets will occupy a much more important position in the asset pools of global individual and institutional investors. This super trend for massive personal and institutional assets to be moved into crypto world will bring explosive growth for the use of Banca community.