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Laxman Pai, Opalesque Asia:

Almost half of the traditional hedge funds are exploring digital assets or are currently investing in them with around a fifth of traditional hedge funds having holdings already, said a study.

The research by the Alternative Investment Management Association (AIMA), conducted in partnership with PWC and Elwood Asset Management, surveyed 39 hedge funds in the first quarter this year with a total of $180 billion in assets under management.

A report found that 47% of traditional hedge funds have entered or plan to enter the crypto market, with 21% currently investing in digital assets and 26% in the late-stage planning of investing. Of the hedge funds already invested, 86% also intend to deploy more capital into the asset class by the end of this year.

Around a quarter of hedge fund managers who are not yet investing in digital assets confirmed that they are in late-stage planning to invest or looking to invest (26%), it said.

When asked what investment strategies (fundamental, trading, arbitrage, venture, pre/post-ICO, passive, other) best describe hedge funds' exposure to digital assets, the majority responded with fundamental (57%) and trading (57%), said the report. Those currently adopting a passive approach to investing in digital assets included 29% of respondents, with the same number stating they are using arbitrage.

In terms of the main obstacles to investing, regulatory uncertainty is by far the greatest barrier (......................

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