Why Italian selectors are curious (but not yet sold) on crypto

MILAN: Cryptocurrencies are a divisive topic. Traditional investors remain cagey on how much to allocate to this area, if anything at all.

Among those adopting a wait-and-see stance is Generali Asset & Wealth Management’s Filippo Casagrande. The head of insurance investment solutions told Citywire Selector that while the lack of regulation is an issue, ultimately it won’t hold back the trend.

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Casagrande has zero cryptocurrency at present but he is not ignorant of the importance of this new theme. ‘As a contrarian, I like studying and understanding cryptocurrency and the way it is shaping the industry,’ he said.

Crypto is evolving and expanding swiftly to become an alternative asset, Casagrande said.

‘Since mid-2020, we have seen the growth of the crypto market, triggered by long-term trends including e-commerce and the adoption of digital payments, but also due to a declining trust in centralised institutions.’

Casagrande is not receiving any formal requests about cryptocurrency from clients, but there is a growing demand elsewhere and he is making sure he will be prepared when the right time comes.

‘Institutional clients are passive in understanding crypto. On the other side, wealthy people and the family offices are eyeing cryptocurrency.’

Francesco Margonari, who works within financial portfolio advisory at Mediobanca, is also watching developments. ‘We don’t invest in crypto, but we are monitoring its evolution very closely.

‘We attend conferences and forums on crypto to have a better grasp of the subject. This is something we have also been doing for blockchain technology, which has a crucial role in cryptocurrency systems,’ he said.

Margonari said Mediobanca cannot ignore this megatrend, as clients, financial consultants and private bankers are asking for advice and opportunities within this space.

He said cryptocurrency is a trend which is increasingly gaining traction partly because fiat currencies are no longer held in such high esteem as they once were.

‘To get exposure to cryptocurrencies for both retail and private investors, it is advisable to opt for ETCs [exchange-traded commodities] listed on European markets. However, we currently have compliance restrictions on these ETC instruments,’ he said.

Margonari said the emotional factor of crypto cannot be ruled out, and he knows of people who are planning to use cryptocurrencies to hedge their portfolios against inflation.

Time to strike?

Crypto is an evolving conversation, according to Roberta Rudelli (pictured), head of fund selection at UniCredit, but the giant insurance firm doesn’t currently engage in any cryptocurrency investment activity.

‘Crypto is not an asset class for us, as it is not regulated. It’d be difficult to create a portfolio, so it’s not investable at present,’ she said.

Rudelli told Citywire Selector that her team recently had a crypto brainstorming session with their asset management partners, but it hasn’t materialised into advice for clients as yet.

‘The portfolio managers we spoke with don’t invest in cryptocurrencies and have opted for blockchain platforms, which are more secure and transparent,’ she said.

BCC Risparmio & Previdenza’s David Karni said crypto has already lost some of its original appeal. The stage when it was skyrocketing is over and now there isn’t much demand.

‘I think crypto is not an investment,’ he said. ‘Crypto is more related to trading or gambling, while an investment is something that you build and let play for you.’

Lack of regulation around this new trend has been often identified as the main problem, but Karni, who is head of investments at the Italian group, said once regulated, crypto would lose its allure.

Another element to factor in is the development of the technology that underpins crypto. ‘If the technology develops further, there will be more supply than demand and crypto investors could lose their money,’ Karni added.