South Korea’s Teachers’ Pension Fund Announces Plans to Invest in Bitcoin on Its Balance Sheet

According to the announcement revealed by the Korea Economic Daily, the Korea Teacher’s Credit Union (KTCU), the second-largest institutional investor in South Korea, is planning to invest in Bitcoin as part of its balance sheet.

The public pension fund would not purchase Bitcoin directly but get exposure to it via investment products like Bitcoin ETFs.

The KTCU is seeking to invest in a Bitcoin Exchange Traded-Fund when the first Korea-based firm launches a Bitcoin ETF in the first half of 2022. Of course, the Mirae Asset Global investment is preparing to launch BetaPro Inverse Bitcoin ETF at any time next year.

The Korea Teacher’s Credit Union is set to become the first pension fund in South Korea to invest in Bitcoin. However, the amount of funds to be invested and the exact time of launch still remains unclear.

A KTCU official talked about the development and stated that the institution plans to consult with local asset management firms before reaching a decision concerning asset allocation.

“As there are some well-made cryptocurrency-linked ETF products by asset managers such as Korea’s Mirae Asset Global Investments, we plan to invest in the ETF products after consultation with domestic asset managers,” the KTCU spokesperson said.

The KTCU is the first pension fund with $40.2 billion in assets under management in South Korea.

At the current moment, the pension fund has allocated 40% of its investments in alternative assets, 9% in international stocks and 10% in domestic. The KTCU will also use the overseas stock accounts for investing in the bitcoin-related ETF assets, the Korea Economic Daily stated.

Crypto Has A Place in Pension Scheme Portfolio

The decision by The Korea Teacher’s Credit Union comes at a time when crypto’s widespread adoption across the world is significantly rising, particularly among pension funds.

Bitcoin has experienced massive growth in the last year, significantly outpacing the S&P 500. Several experts state that the reason for such growth is contributed by lower stock market returns in the near term, fears of inflation, and investors looking for higher yields from alternative investments.

Bitcoin is increasingly becoming a larger part of several institutional portfolios, including pension funds.

Recently as reported by Blockchain.News in February, the California Public Employee Retirement System (CalPERS), the U.S.’s largest public pension system, revealed that it increased its investment in RIOT Blockchain Inc, a publicly-traded bitcoin mining company, from $49,000 in 2017 to $1.6 million in 2020.  

Pension funds such as CalPERS normally have been searching for higher investment yields by investing in private equity. However, in recent years, returns from private equity have underperformed in comparison to the S&P.

As a result, institutional investors have been showing increasing interest in even riskier assets that may produce higher yields. This search has led public pension institutions such as Virginia’s Fairfax County employee and Police Officer’s Retirement Systems and the University of Michigan’s Pension to announce plans to invest in Bitcoin and other crypto-assets.

Last week, Houston’s Firefighters Relief and Retirement Fund in the U.S. invested an undisclosed amount of its funds in Bitcoin through institutional Bitcoin services provider NYDIG.

A few days ago, the crypto space got its long-awaited ETF products, and two U.S. Bitcoin backed ETFs have already launched, thus bringing further acceptance of cryptocurrencies.

With the success of the ProShares Bitcoin Strategy EFT, which garnered more than $1 billion in assets in just two days, chances are higher for the queue of other firms hoping to enter into the sector.

The Valkyrie Bitcoin Strategy ETF started trading on the Nasdaq stock exchange on Friday last week, with 3.1 million shares changed hands during that day alone.

All these demonstrate great interest among investors looking to invest in Bitcoin and other cryptocurrencies.