Endowments are quietly recalibrating their playbooks — and crypto is starting to look less like a fringe bet and more like a potential line item. Speaking at the iConnections conference in Miami Beach, several chief investment officers warned that the market conditions that rewarded traditional strategies over the past decade are unlikely to repeat. Equity valuations are elevated, credit spreads sit near historic lows, and private markets are crowded, creating “return compression and probably Alpha compression,” said Kim Lew, CEO and president of Columbia Investment Management Company. That squeeze makes hitting required payout and budget targets harder: large private foundations typically must distribute roughly 5% of assets yearly, and when you add operating costs, the hurdle can push required returns toward the 8% range, said Carlos Rangel of the W.K. Kellogg Foundation. “If you don't earn returns of 8% the model doesn't work,” he warned. That pressure is nudging endowments to “move a little bit further on the risk curve,” Lew said — and in some cases, that means exploring digital assets. Institutional exposure to crypto is not entirely new: university endowments such as Yale and early adopters like Harvard and others backed venture funds focused on crypto years ago, gaining indirect exposure through private vehicles. What’s changed recently is accessibility. The U.S. approvals of spot bitcoin and ether ETFs have created a simpler, operationally cleaner path for large funds to gain direct exposure. Harvard and Brown have even disclosed positions in both bitcoin and ether ETFs in recent 13F filings. Still, the timing is complicated. Over roughly the past year, digital assets have underperformed broader equities and experienced sharp volatility — Bitcoin fell about 26% over the past year while the S&P 500 rose nearly 17% over the same period. Bitcoin is also down nearly 50% from its October all-time high. But many institutional investors operate with long horizons and can tolerate near-term drawdowns in pursuit of potential long-term upside. That dynamic makes crypto — now available via ETFs — an attractive high-risk, high-volatility satellite allocation for portfolios seeking return enhancement outside of crowded traditional markets. Even if allocations remain small relative to giant endowments’ total portfolios, the trend matters. These disclosures mark another step in crypto’s shift from the fringes of institutional finance into mainstream investment toolkits. For funds facing anemic expected returns from stocks, bonds and private deals, regulated spot ETFs in bitcoin and ether offer a governance-friendly way to add a differentiated, non-correlated (or less correlated) sleeve. Panelists cautioned, however, that the problem goes beyond any single asset class. With thin equity risk premiums, record amounts of unsold private-market inventory, and heightened macro uncertainty, many institutions are simply tempering expectations for “outstanding returns,” Lew said. The move into crypto is therefore less a broad embrace and more a calculated search for incremental sources of return — balanced by risk controls, long time horizons, and recognition that digital assets remain volatile. For the crypto market, even modest, deliberate allocations by endowments could be meaningful: they signal growing institutional legitimacy and may support demand over time, but they also bring scrutiny and a need for robust operational, custody and governance frameworks. Endowments appear ready to experiment — cautiously — as they hunt for returns in an era where conventional advantages have narrowed. Read more AI-generated news on: undefined/news

#BTC #ETF #ETH