Investors Diversify Portfolios with Digital Currencies and Precious Metals

Treasurers Embrace Bitcoin and Gold as Capital Allocation Enters Innovation Era

A growing number of treasurers are turning to alternative assets like bitcoin and gold as they seek to diversify their capital allocation strategies and navigate a rapidly changing financial landscape.

According to a recent survey by the Association for Financial Professionals (AFP), more than 20% of treasurers are now investing in cryptocurrencies, up from just 2% in 2020. Meanwhile, gold is also gaining traction, with nearly 40% of respondents saying they are investing in the precious metal.

The trend is driven by treasurers' desire to reduce their reliance on traditional assets and take advantage of the diversification benefits offered by alternative investments. As the global economy becomes increasingly complex and interconnected, treasurers are recognizing the need to adapt their capital allocation strategies to reflect the new reality.

"Treasury teams are no longer just focused on managing cash and hedging risk," said Andrew Graham, CEO of the AFP. "They're now taking a more proactive approach to investing and diversifying their portfolios to achieve their financial goals."

Bitcoin, in particular, is attracting attention from treasurers due to its potential for high returns and its relative independence from traditional markets. As the cryptocurrency's market capitalization has grown, so too has its appeal as a store of value and a hedge against inflation.

Gold, meanwhile, is seen as a tried-and-true store of value that has historically performed well during times of economic uncertainty. Its appeal is driven by its physical properties and its ability to serve as a hedge against inflation and market volatility.

The shift towards alternative assets is also driven by the growing recognition of the importance of environmental, social and governance (ESG) factors in investment decisions. As investors increasingly prioritize sustainability and social responsibility, treasurers are seeking to align their investment strategies with their values.

The trend is likely to continue as treasurers seek to stay ahead of the curve and capitalize on the opportunities presented by the rapidly evolving global economy. As the AFP's Andrew Graham noted, "The days of simply managing cash and hedging risk are behind us. Treasury teams are now embracing innovation and taking a more proactive approach to investing and diversifying their portfolios."