Why an RIA founder is suggesting a 10-40% crypto allocation
A 40% allocation to crypto today is safer than a 1% allocation was in 2021, Ric Edelman argues
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In the 1980s, Ric Edelman started what is now called Edelman Financial Engines — a registered investment adviser that had $287 billion assets under management at the end of Q1. He’s now recommending a 10% allocation to crypto for conservative investors.
That should go up to 25% and 40% for those with moderate or aggressive risk appetites, respectively, he advised in a report earlier this month. An excerpt is below:
Bloomberg Intelligence analyst Eric Balchunas labeled Edelman “Mr. RIA” in an X post — calling his statement “arguably the most important full throated endorsement of crypto from TradFi world since Larry Fink.”
It’s worth noting that Edelman has been bullish on crypto for years, creating the Digital Assets Council of Financial Professionals in 2018. He said this month he expects BTC to hit $500,000 by 2030.
Still, it’s a dramatic increase from when Edelman, in his 2021 book The Truth About Crypto, recommended a 1% allocation. We had heard of adviser allocations to bitcoin ETFs ranging from 1% to 10%, and BlackRock in February started allocating 1-2% of the assets in its alternatives-focused model portfolios to its IBIT offering.
Unlike four years ago, there’s no risk the US government could ban crypto (and it actually supports the space), Edelman told me. Bank and brokerage firms can also now trade and custody crypto, allowing the adviser community to participate. Crypto has survived scandals and institutional engagement has begun, he added.
“A 40% allocation today is actually safer than a 1% allocation was four years ago,” Edelman said.
The financial pro has lots of chats with advisers, senior firm management and individual investors.
“Some are crypto-curious with no established view,” Edelman explained. “Others are skeptics, and some are downright hostile.”
As he put it, there are those who stubbornly resist (i.e. anti-MAGA folks who frame crypto in a political way, or those who don’t understand modern portfolio theory). But much of the “hostile” group can be converted by simply shifting their focus away from crypto and toward their business.
“Demonstrating that crypto can help them attract more clients, AUM and referrals is powerful commentary,” Edelman noted. (He has told me he expects crypto skeptic/fund giant Vanguard to ultimately reverse its anti-crypto policy position, too.)
When following up with Edelman on his latest allocation advice, I wanted to clarify what type of crypto exposure he was referring to. He leaves that to the adviser or investor, he said, as preferences range (BTC only, a mix of several tokens, crypto-linked equities, etc).
Digital asset investment products notched net inflows of $2.7 billion from June 23-27, CoinShares data shows — marking an 11th straight inflow week for the segment. While the bulk of that capital flowed into bitcoin products ($2.2 billion), $429 million went to ether offerings.
On the crypto stock front, Circle’s IPO earlier this month clearly piqued both institutional and retail interest (its stock price was ~$180 this afternoon. There’s Coinbase, Strategy and Robinhood too, of course — with COIN, MSTR and HOOD having seen year-to-date gains around 37%, 34% and 134%, respectively.
HOOD stock was up 11% on Monday, as of 1:30 p.m. ET, after sharing some tokenized stock news.
A related update: Kraken, which signaled it would soon offer tokenized US stocks and ETFs to non-US investors, went live with that today.If you missed my Permissionless/tokenization piece from Friday, here you go. Until next time.
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