Cryptocurrency and blockchain investments have previously been made by Fairfax County, Virginia, but the county is eyeing a greater investment in yield farming.
Fairfax County Police Officers Retirement System chief investment officer Katherine Molnar said the system hopes to finance two new crypto-focused financiers in the next three weeks at today’s Milken Institute Global Conference. The story was initially reported by Bloomberg.
At least seven investments have been made in the crypto sector by Fairfax, which includes investments in venture capital firms and a crypto-focused pension fund, according to Molnar.
An alternative approach to managing volatility is included in those seven allocations. Hedge funds use a number of crypto tactics, including yield farming and basis trading as well as cross-exchange arbitrage.
Her response was, “We enjoy the hedge fund, and we appreciate the fact that there is a lot of volatility.” This asset class volatility is beneficial for relative value strategies, so rather than be frightened off by it, we’re looking for a setting in which we can ‘harness’ it.
The system is working with two new hedge funds that use separate yield farming methodologies. By staking our lending assets, yield farming gives liquidity to decentralised exchanges by generating returns of between four and 1000 percent, according to Molnar.
The system and these managers have worked out income splits in certain circumstances. If you are looking for a fixed income replacement, Molnar thinks yield farming is a viable option.
As a “high-yield alternative,” “the returns we’re anticipating are, let’s say, closer to nine to 11 percent in one instance and the other manager may be somewhat more than that, so appealing as a fixed income replacement,” she said.