AMP has entered the history books as the first major Australian superannuation fund to allocate part of its portfolio to Bitcoin. The $27 million investment, representing 0.05% of AMP’s $57 billion in funds under management, is a bold move that has sparked widespread debate across the financial industry.
Why AMP Invested in Bitcoin
Anna Shelley, AMP’s Chief Investment Officer, revealed that the decision to invest in Bitcoin was part of a broader diversification strategy. The move was guided by AMP’s dynamic asset allocation process, which identified Bitcoin’s strong momentum and growing market sentiment.
“Even though crypto is risky and not yet fully proven, its potential has become too significant to ignore,” said Shelley.
The investment took place in May 2024, when Bitcoin was trading between $60,000 and $70,000. Since then, the cryptocurrency has surged to unprecedented levels, breaking the $100,000 mark in December following the re-election of U.S. President Donald Trump, who has championed a crypto-friendly agenda.
Industry Reactions: Divided Opinions
AMP’s groundbreaking investment has received a mixed response from industry leaders and regulators.
Skepticism from Other Super Funds
Major players like AustralianSuper and MLC have opted to stay on the sidelines. An AustralianSuper spokesperson stated that while the fund is exploring blockchain technology, it has no plans to invest directly in cryptocurrencies.
Similarly, MLC’s Chief Investment Officer, Dan Farmer, noted that while the fund isn’t investing in crypto now, the decision is “not yet, rather than not ever.”
Critics Raise Concerns
Reserve Bank Governor Michele Bullock has previously dismissed cryptocurrency’s relevance to the Australian economy. Critics, including former RBA Assistant Governor Luci Ellis, argue that Bitcoin lacks the stable value and income-producing characteristics that make assets suitable for retirement portfolios.
“It’s not like equities that provide dividends or bonds that yield interest. Cryptocurrency doesn’t fulfill the function of money in a traditional sense,” Ellis said.
Support from Crypto Advocates
In contrast, Caroline Bowler, CEO of BTC Markets, expressed enthusiasm for AMP’s decision. She compared investing in Bitcoin now to backing tech stocks in the 1990s.
“Digital assets are still in their infancy. Those who dismissed tech stocks decades ago missed out on a revolution. Bitcoin represents a similar transformative opportunity,” Bowler said.
Impact on AMP Customers
AMP’s Bitcoin investment primarily impacts customers in its balanced and high-growth superannuation options. These portfolios use AMP’s dynamic asset allocation process, which includes higher-risk, high-reward assets.
Shelley assured customers that the exposure remains within the fund’s upper risk limits. “While there are risks and volatility, our customers have benefited from this exposure,” she said.
Conservative investment options, which prioritize low-risk assets, are unlikely to see any significant crypto allocation.
Bitcoin’s Record-Breaking Year
Bitcoin’s meteoric rise in 2024 has added momentum to institutional interest. The cryptocurrency hit an all-time high of $100,000 in December, fueled by a combination of factors:
- Political Support: The re-election of Donald Trump brought renewed optimism for a crypto-friendly regulatory environment in the U.S.
- Institutional Adoption: Increasing numbers of companies and funds are integrating Bitcoin into their portfolios, further legitimizing its role as an asset class.
- Growing Mainstream Acceptance: Bitcoin’s rise has been accompanied by advancements in blockchain technology and broader acceptance as a store of value.
AMP Senior Portfolio Manager Stephen Flegg highlighted Bitcoin’s “barnstorming year” as a key factor in the fund’s decision.
The Broader Context: Crypto in Superannuation
While AMP’s investment is groundbreaking, self-managed super funds (SMSFs) in Australia have already embraced cryptocurrency. Crypto exchange Coinstash estimates that SMSFs hold between $2 billion and $3 billion in digital assets.
University of NSW Economics Professor Richard Holden called AMP’s move a “significant moment” for public-offer super funds. However, he cautioned against overexposure, particularly for individual investors.
“For mum and dad investors, it’s important to maintain a balanced approach. While Bitcoin has potential, retirement portfolios should prioritize stability and income generation,” Holden said.
Regulatory Oversight and Future Implications
The Australian Prudential Regulation Authority (APRA) has advised super funds to exercise caution with crypto investments. In a 2022 letter, APRA emphasized that funds must demonstrate how such investments align with their duty to act in beneficiaries’ best financial interests.
AMP’s foray into cryptocurrency could pave the way for more funds to consider similar moves. However, stringent regulatory requirements and concerns about volatility may slow widespread adoption.
The Road Ahead for Crypto and Superannuation
AMP’s decision to invest in Bitcoin marks a watershed moment for the Australian superannuation industry. While other funds remain cautious, the move highlights the growing recognition of digital assets as a legitimate component of diversified investment strategies.
As the crypto market matures and regulatory frameworks evolve, the line between traditional and digital assets is likely to blur further. For now, AMP stands as a pioneer, charting new territory in the intersection of superannuation and cryptocurrency.
