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Cryptocurrencies

KTCU to be Korea’s first pension fund to invest in cryptocurrency ETF

The pension fund is set to launch its first cryptocurrency investment as the asset goes mainstream

By Oct 25, 2021 (Gmt+09:00)

KTCU to be Korea’s first pension fund to invest in cryptocurrency ETF

South Korea’s second largest institutional investor Korean Teachers' Credit Union (KTCU), with $40.2 billion under management, is eyeing its first investment in a spot-based bitcoin exchange-traded fund (ETF), industry sources said on Oct. 25.

The union is expected to be the first Korean pension fund to invest in a cryptocurrency-linked ETF. The size and other details of the investment are yet to be determined, however, it is expected to begin in the first half of next year.  

“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”, a KTCU official said.

As the pension fund mentioned, Mirae Asset Global Investment listed BetaPro Inverse Bitcoin ETF, which profits when bitcoin’s value declines, on Canada’s Toronto Stock Exchange on Oct. 15. The asset manager’s subsidiary Global X has filed for another Bitcoin ETF Global X Bitcoin Trust with the US Securities and Exchange Commission (SEC) in July, awaiting to launch it later this year.

The pension fund invests around 40% of its assets under management (AUM) in alternative assets, 10% in domestic and 9% in overseas stocks. It will use overseas stock accounts for its investment in Bitcoin-related ETF products.

KTCU’s decision to invest in cryptocurrency comes as it has become a mainstream asset for some global pension funds, analysts say.

California Public Employees’ Retirement System (CalPERS) in the US is holding around 113,000 shares of Riot Blockchain, worth about $3 million as of end-2020. Fairfax County Police Retirement System in the US has committed to an investment of $11 million, which represents 0.8% of its total assets, according to its website.

In addition, the Houston Firefighters’ Relief & Retirement Fund (HERRF) in the US bought $25 million worth of Bitcoin and Ethereum earlier this month. “We have been studying this as an asset class to add to our investment portfolio for quite some time,” said the fund’s chief investment officer Ajit Singh. “It became an asset class we could not ignore anymore.”

There are many Bitcoin strategy ETFs, mainly in North American financial markets. On Oct. 19, ProShares Bitcoin Strategy ETF was listed on the New York Stock Exchange with $980 million worth of transactions made on the first day of listing. It was the second-largest trading amount on the first day of ETF listing after SPDR Gold Share, a gold-related ETF in 2004.

"Korea’s pension funds haven’t been active in cryptocurrency investment, however, they are changing as cryptocurrency is rising as a mainstream asset,” an official from the pension fund industry said.

Write to Jae-Fu Kim and Jong-Woo Kim at hu@hankyung.com


Jihyun Kim edited this article.

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