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Optimizing Cryptocurrency Allocations: Unveiling the Perfect Risk Balance – Insights from FinMason’s Latest Report

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Boston Wealth Management Firms Considering Adding Cryptocurrencies to Portfolios


BOSTON, Sept. 7, 2023 /PRNewswire/ — Mainstream wealth management firms are now looking to add cryptocurrencies to their portfolios and platforms. However, there has been little consideration given to how well these assets fit into a traditional investment portfolio in terms of risk, diversification, and returns. FinMason, a leading investment data and analytics firm, has created a framework to analyze the inclusion of cryptocurrencies in traditional portfolios.

Analysis of Traditional Investment Portfolio

FinMason’s President and Chief Analytics Officer, Philip Taylor, CFA, used the company’s cloud-based calculation engine to analyze a traditional investment portfolio with the addition of cryptocurrencies. Taylor used one of the largest “Moderate Allocation” ETFs as a proxy for a well-diversified traditional portfolio, Bitcoin as a proxy for cryptocurrencies, and a large S&P500 index ETF as a proxy for U.S. Equities.

Results of the Analysis

Taylor reviewed various allocation, risk, and return scenarios. One portfolio consisting of 59% Moderate ETF and 41% Bitcoin had the highest 10-year Sharpe Ratio of 1.06. However, it was also a highly risky portfolio with an annual 10-year volatility of 32.0%, more than double the risk of the S&P 500 index with a 10-year volatility of 14.9%. On the other hand, a portfolio of 15% Bitcoin and 85% of the moderate allocation ETF produced a Sharpe Ratio of 1.02, with the same risk as the S&P 500. Additionally, it had a far smaller “drawdown” of -27.3% compared to -50.9% for the S&P 500.

Importance of Assessing Fitness for Inclusion

Philip Taylor emphasized the importance for investment professionals to assess the fitness of investment opportunities for inclusion in their portfolios. FinMason offers easy-to-use, scalable, and efficient solutions for all types of financial firms to evaluate investment opportunities.

Full Report

To read the full report, please click here.

About FinMason

FinMason was founded by experienced industry insiders and leading technologists who have managed institutional portfolios, built and managed performance, risk, and analytics systems for large institutions, and built and sold large technology companies. FinMason solves the two largest hurdles in investment analysis – wrangling market data and calculating analytics at scale. For more information about FinMason, visit or email [email protected].

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