Institutional investors and wealth managers are expecting a surge in new digital assets funds this year as traditional financial institutions increasingly look to the sector, according to research by digital assets hedge fund manager Nickel Digital Asset Management (Nickel).
Around 70% of those questioned by the London-based firm, which was founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan, predicted a rise in digital asset focused fund launches in the next 12 months compared with the last 12 months with one in seven (14%) forecasting dramatic growth.
Nickel’s research with institutional investors and wealth managers in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates who collectively manage around $1.7tn in assets, also reveals that any increase in fund launches will be accompanied by growing engagement in the digital assets sectors by traditional financial institutions.
Up to 93% of respondents believe the number of traditional firms launching funds in the sector will increase over the next three years with 38% predicting a dramatic increase. A key factor behind the trend is the success of BlackRock’s first tokenised fund (BUIDL) launched in March this year on the Ethereum network. Currently its AUM is around $500m but 95% of investors questioned believe it will hold around $10bn by the end of 2025.
The study found that 85% of investors say BUIDL is appealing to their organisation as an alternative to other stablecoins while another 12% said it would have to be accessible to a wider investor audience beyond institutions only.
Around one-in-20 (5%) meanwhile, said they were already invested in tokenised funds such as BUIDL while another 13% said they expected to be invested in tokenised funds within 12 months. Almost all (99%) said they are or will be invested in similar funds within four years.