"Morgan Stanley's Global Investment Committee has formally recommended that clients allocate between 2% and 4% of their portfolios to bitcoin and crypto. The new report, issued on October 1, outlines crypto (primarily bitcoin) allocations based on investor risk profiles. Opportunistic growth portfolios, which target higher-risk and higher-return strategies, should include up to 4% in crypto, while balanced growth portfolios are capped at 2%, the report read."
""We place the emerging asset class within real assets and focus our commentary here primarily on bitcoin, which we consider a scarce asset, akin to digital gold," the report read. While Morgan Stanley acknowledged the asset class's historical volatility and potential for high correlation with broader markets during stress periods, it also noted that crypto's total returns and structural maturity have improved in recent years."
"Morgan Stanley said that clients should regularly rebalance their multi-asset portfolios to include crypto - ideally every quarter, or at least once a year. "Such rebalancing will dampen the potential for swelling positions, which could mean outsized portfolio-level volatility and cryptocurrency risk contributions in periods of macro and market stress," the report read. The report recommended gaining exposure through exchange-traded products to manage volatility and prevent portfolio distortion during strong uptrends."
Morgan Stanley's Global Investment Committee recommends clients allocate between 2% and 4% of portfolios to bitcoin and crypto, with 4% for opportunistic growth strategies and 2% for balanced growth. The committee characterizes bitcoin as a scarce asset akin to digital gold and places crypto within real assets. The committee acknowledges historical volatility and potential for high correlation with broader markets during stress, while noting improved total returns and greater structural maturity in recent years. Clients are advised to rebalance multi-asset portfolios regularly—ideally quarterly—to limit position swelling and portfolio-level volatility. The committee recommends using exchange-traded products to manage volatility and prevent distortion during strong uptrends, as bitcoin reached an all-time high near $126,200 amid spot ETF inflows and a weaker U.S. dollar.
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