minutia that my friends have attempted to interject this
court into. >> The Wisconsin pension Fund,
ranked as one of the most fiscally sound in the nation,
took bold action this year. It invested in Bitcoin. Most all
government workers are part of the employee Trust fund that
pays out retirement benefits. But for a pension fund widely
known for being stable, prudent and smart with investments, is
this a departure or right on brand? Our next guest says it's
certainly turning heads. We should note PBS Wisconsin
employees are participants in the Wisconsin Retirement System.
We are joined by David Krause, Marquette University emeritus
associate professor of finance. And thanks very much for being
here. Yes, thank you. So what is the reaction within the kind of
investment industry to this news?
pretty amazed that a pension fund this early in the
introduction of the Bitcoin ETF came on board. They expected it
might take several years before there would be institutional
involvement with Bitcoin >> So the Bitcoin ETF is
different. >> And apart from the kind of
bitcoins that folks might have in their digital wallets.
>> Yeah that's right, it was January of this year that the
Spot Bitcoin ETF was approved by the SEC. That allowed investors
like the university systems or Swib, in this case, the
Wisconsin Investment Board, to buy directly these securities
that are regulated by the SEC, highly liquid and traded on
exchanges is still. >> Was it a surprise to you to
see that it was, but Wisconsin's investment board has always been
innovative. pension fund. So in a way they
have the luxury of being able to invest for the long term. They
don't need to worry as much about liquidity as, say, the
pension fund for the state of Illinois, which is only funded
at 50% of its level. >> So should it cause
pensioners, though, or workers, to worry given the volatility of
Bitcoin, a lot of assets are volatile.
look deep down into the portfolio, you would see that a
lot of assets, including some stocks as well as some other
alternative investments are quite volatile in nature. Yeah,
Bitcoin has moved around a lot, but supply and demand and are
starting to balance out. And I do think the investment
community is beginning to understand this more as a viable
alternative investment. >> So how much are they putting
into Bitcoin compared to the fund itself?
It's just a toe in the water. It's one tenth of 1. Now $180
million is not pocket change. But this is $180 billion fund. I
think it's just an entry point. I think they're testing to see
the reaction of the public to whether or not there's
resistance to owning this, and they're using it as a trial run,
because it really is not going to impact the portfolio.
Substantial really, until you get to maybe a 1 or 2%
positioning. >> Because I was going to ask
you, what does your expertise tell you about whether this is a
good investment for the pension fund?
>> Well, it's a good investment in the sense that it's going to
add diversification in the objective of a portfolio manager
or a fund is to maximize return while minimizing risk. Bitcoin
like other alternative parallel with stocks and bonds.
So therefore it adds nice diversification effect. The
potential upside returns are high as it could be with any new
technology, and finally, because this is a currency with a
limited supply, it actually can serve as an inflation hedge. I
don't think very many people talk about the potential for it
to remove volatility of government actions.
>> Do you expect other states to follow suit? Watch this closely
and follow. expect those that are
underfunded can afford to do that because this is a long
play. I mean, the state of Wisconsin can afford to go
through maybe several cycles. I think the long term trend of
this type of assets is going to be upward slope, but there's
going to be dips, there's going to be peaks, but if you're a
pension fund with low liquidity, you really can't afford long
plaits. investment in Bitcoin
>> The day that it was announced and that's when the SEC 13 F
form became available to the public. That day, Bitcoin went
up 1. Now is it solely attributable to the fact that an
institutional investor bought the market did pay attention to
that. And I would not be surprised to see other
institutional investors move into this asset category.