Ark Invest’s Cathie Wood believes that cryptocurrencies could soon become a part of recommended portfolios for everyday investors.
What Happened: In her most recent interview with CNBC, Wood even went on to say that the currently volatile cryptocurrencies could soon stabilize and behave as bonds do.
“We think as it becomes a better accepted new asset class … We do think it will behave, actually, I would say more like the fixed income markets, believe it or not,” Wood said on CNBC’s Closing Bell.
The Ark CEO notes that a typical investor portfolio consists of a 60% allocation to stocks and a 40% allocation to bonds.
“This idea of a 60-40 balanced portfolio is a bit problematic”, she notes, explaining that bond prices are especially high relative to history.
“We’ve been through a 40-year bull market in bonds. We would not be surprised to see this new asset class become a part of those percentages. Maybe 60% in equity, 20% in bonds, and 20 –– in crypto,” Wood said.
Why It Matters: Retail investors have often been skeptical about allocating a percentage of their portfolio towards cryptocurrencies due to their perceived risk.
However, more recently, some large retail investors have begun making somewhat sizeable allocations towards cryptocurrencies – one of them being billionaire investor Kevin O’Leary who recently disclosed a 3% portfolio allocation towards cryptocurrency.
Analysts from JPMorgan Chase & Co. (NYSE:JPM) also recently recommended a 1% portfolio allocation towards cryptocurrencies to its clients.
Wood’s recommended 20% crypto allocation, however, far exceeds what typical fund managers and investment banks have previously suggested.
Image: Cytonn Photography via Pexels
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