Friday, December 9, 2022

Fairfax County highlights the value in the ‘short-term nature’ of yield farming


Virginia’s Fairfax County continues to be a outstanding public institutional investor in the cryptocurrency house and is about to diversify its portfolio with a transfer into yield farming.

As beforehand reported, world asset managers VanEck introduced that the Fairfax staff’ and police retirement programs will invest $35 million into the firm’s crypto lending fund. It’s the newest funding transfer by the two county-run funds in the cryptocurrency house since their unique foray started in 2018.

Cointelegraph reached out to Andy Spellar, the chief funding officer of Fairfax’s staff’ retirement system, to unpack their funding in VanEck’s crypto lending fund and the reasoning behind it.

Spellar confirmed that the staff’ retirement system (ERS) had dedicated $25 million to the fund whereas the cops’ retirement system (PORS) had pledged $10 million. The funding will happen between July and September this 12 months, relying on market circumstances.

An preliminary tranche has already been acquired by VanEck, with Spellar revealing that the ERS and PORS have invested $10 million and $5 million, respectively for the month of July.

The transfer is actually excellent news for the cryptocurrency house, which is presently enduring a extreme downturn alongside typical inventory markets worldwide. The Decentralized Finance (DeFi) sector has arguably suffered the most, with the collapse of algorithmic stablecoin Terra inflicting a cascading impact all through the house.

Related: Survey shows 55% of crypto investors chose to HODL as Bitcoin and altcoin prices collapsed

As the wider cryptocurrency ecosystem weathers the storm, funding schemes and funds like Fairfax County’s ERS and PORS proceed to see the value supplied by the sector, as Spellar instructed Cointelegraph:

“We have looked at the space as a diversifier with our credit/high yield portfolios and particularly performance periods like the very short-term nature (1-3 months) of the positions.”

Spellar supplied meals for thought on the present market circumstances, noting {that a} risk-adjusted foundation outlook means that cryptocurrency markets haven’t offered off any greater than excessive progress sectors like tech, life sciences or authorities bonds:

“We have not seen anything to counter the long-term thesis that more things than less will be digitized in the future, including traditional assets themselves. These types of markets shake out weak players and technologies and are overall healthy for markets and industries.”

The ERS and PORS funds have managed to fare properly amid broad market sell-offs resulting from their broadly diversified portfolios. Spellar famous that each are top-performing public funds throughout quick and long-term time domains and expects the newest quarter of the 12 months to be no totally different in phrases of efficiency.

Despite the first six months of 2022 being one of the worst efficiency durations on report, Fairfax expects each programs to be high decile performers over the interval. Spellar stated the digital asset section of their portfolio was very small, with the overwhelming majority made up of conventional enterprise capital fairness investments.