Hedge fund company Marshall Wace plans to invest in the digital assets sector, say people familiar with its plans, as a growing interest in cryptocurrencies and related technologies attracts large asset managers.
The London-based group, which manages $ 55 billion in assets, will direct investments in sectors such as blockchain technology, digital currency payment systems and stablecoins, according to one of the people. The group has launched a portfolio that will include stakes in privately owned digital finance companies that are at a late stage of their development, the person said.
Marshall Wace’s cryptocurrency incursion comes at a time of rapid expansion for the industry, with a growing number of traditional financial companies, including fund managers, banks and consulting firms building digital assets.
The company said the company has recently sought to employ staff in the digital business sector. While the new business is still in an early stages, the group plans to expand it rapidly into a move that could include other forms of investment, for example potentially digital currency trading. Marshall Wace declined to comment.
The expansion by Marshall Wace, which has not been reported before, marks the latest major hedge fund to uncover opportunities to make money in the fast-growing digital asset industry. Last year Jim Simons Renaissance Technology disclosed in a presentation who could invest in bitcoin.
Brevan Howard has changed a small portion of his assets in crypto and his co-founder, billionaire Alan Howard, is a great support of the sector, having recently invested in the custody of digital assets and in the trading technology company Copper.co and in the crypto trading application Kikitrade.
Marshall Wace, which was founded by Sir Paul Marshall and Ian Wace in 1997, earlier this year launched a fund to invest in healthcare companies before floating and then holding them after listing. The move was part of the company’s plans to exploit new sources of return in private markets.
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One person said the new digital finance portfolio will take a similar approach, making late-stage venture capital investments in companies engaged in digital finance infrastructure. The infrastructure around stablecoins – tokens that act as a key gateway between the conventional financial market and cryptocurrencies – is a particular area of focus for the company.
Its new launch will be led by Amit Rajpal, executive director of Marshall Wace Asia and co-founder of Indian fintech firm Niyogin, which lends to small businesses. Marshall Wace is still talking to potential investors in the new portfolio and the size of the launch is unclear.
Marshall Wace’s Neutral Fund Tops Market, which analyzes recommended sales by about 1,000 external analysts, gained about 11 percent this year at the end of May.
Marshall Wace was one of many investors to participate in a $ 440 million fundraising round for Circle, the U.S. financial technology company behind the stablecoin USD Coin, in late May.
A recent investigation found that hedge funds expect to significantly increase their exposure to cryptocurrencies to 7.2 percent of their assets on average over five years.
However, some hedge funds remain skeptical. Paul Singer’s Elliott Management wrote to investors earlier this year that cryptocurrencies could become “the biggest financial scam in history,” in a letter seen by the Financial Times.