In a volatile market, fund managers should remain interested in different kinds of asset classes, James Grigor, chief investment officer at NZ Funds tells Good Returns.

For Grigor and the team behind the KiwiSaver portfolio at NZ Funds that means allocating money into cryptocurrency.

He says “The way that we think about managing money for our clients, the building blocks of our portfolios are always going to be shares and bonds. But we do think that you need to take a step back and think, ‘Where are the opportunities in the investment landscape to generate returns over and above that?’.”

Grigor compares bitcoin to investing in gold.

“[With] all of the hallmarks and the case for investing in gold, you should absolutely be investing in bitcoin. The investment philosophy and reasoning is very similar, around store of value and protecting from government inflation.”

The allocation of cryptocurrency, or bitcoin, in the NZ Funds KiwiSaver portfolio has raised industry eyebrows. But Grigor says that the critics don’t understand the details of what is at play.

“To those people that are naysayers about cryptocurrencies or other investments that are not your vanilla stocks and bonds, take some time to step back and be curious.

“Put some capacity into researching these things because it all helps to generate wealth for people’s retirements.”

For advisers whose clients are asking them about cryptocurrency investment Grigor has some advice.

“Advisers need to be sceptical about all asset classes. Not just alternative assets. But I would say that you have to continually challenge yourself to be curious and to be innovative.

“I would encourage advisers to stay curious, keep asking questions, challenge their investment management.

“Challenge NZ Funds for having bitcoin, but challenge other investment managers for why they don’t. Because I believe that many of the ones who don't, don’t understand enough about the asset class and have assumed that it is not right for them.”