The trustees of an unnamed UK pension scheme have made a 3 per cent allocation to Bitcoin, in what is thought to be a "first of its kind" investment for the UK pensions industry.

The allocation took place in October after a "rigorous" training and due diligence process, and aims to reflect the scheme’s relatively long investment time horizon.

Cartwright, which provided advice on the investment, noted that trustees are increasingly looking for innovative solutions to future-proof their schemes in the face of economic challenges.

It also pointed out that Bitcoin’s asymmetric return profile enables a small allocation to have a big positive financial impact, protected by the extensive risk management at both scheme and asset levels.

Given this, Cartwright director of investment consulting, Sam Roberts, highlighted the Bitcoin allocation as a "strategic move" that, not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.

"Integrating Bitcoin into a pension scheme’s investment strategy is a bold step that reflects the forward-thinking nature of the trustees involved," he continued.

"We are proud to have led this ground-breaking move which we hope will be the start of a trend for institutional investors in the UK to catch up with their increasing number of peers and competitors around the world who are already taking advantage of Bitcoin's unique attributes.”

Cartwright head of investment implementation, Steve Robinson, also pointed out that the operational procedures around this Bitcoin investment were specifically designed to maximise the security of the asset whilst allowing profits to be taken quickly as and when they arise.

"By combining a highly secure custodial solution with a mechanism to quickly trim profits as they arise, we’ve opened the door for risk-averse pension schemes and other institutional investors to benefit from Bitcoin's potential growth whilst managing volatility within a secure strategic framework," he explained.

“The solution created also has a low minimum investment threshold meaning that this option is available to pension schemes of all sizes, unlike many historic investment ideas when they first become available.

"We are excited to be at the forefront of integrating this exciting asset into a traditionally conservative space and we are confident that this strategic move, coupled with our secure custodial approach, will provide long-term value to scheme members while offering an innovative way to reduce reliance on employer contributions.”

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