More Than One-Third of Institutional Investors Are Exploring Digital Assets

More institutional investors are considering adding digital assets to their portfolios as they recognize the benefits of emerging technologies, according to a Northern Trust report.

The Tech Horizons: Exploring the Future of Innovation survey of more than 100 investment professionals and industry consultants found that 34% of institutional investors have already incorporated or plan to add digital assets to their investment portfolios in the near future.

Northern Trust said this strategic movement underscores the growing recognition of the potential for digital assets to enhance diversification and drive innovation within investment line-ups.

The report also revealed that 66% of respondents expect private assets to benefit the most from a transition to digital formats, followed by commodities and property (53%) and money market funds (36%).

According to Northern Trust, this reflects a broader industry trend towards the digitization of traditionally illiquid asset classes, which aims to unlock new efficiencies and value.

Despite growing digitization, institutional investors remain focused on ongoing concerns surrounding cyber risks and AI-driven threats. Cybersecurity is a top priority, with 88% identifying cyber risk as a top or major issue for their organizations.

The potential threats posed by advancements in AI are also significant, with 81% expressing high or moderate concern about AI-driven threats or attacks.

However, despite the potential threats of AI, investors are also recognizing its positive impact as more than a third of respondents reported that they believe AI has the potential to significantly enhance portfolio optimization.

Pete Cherecwich, incoming chief operating officer at Northern Trust, said:  “These findings underscore the duality of opportunities and challenges, as our clients navigate their data needs with the emerging integration of digital assets and advanced technologies,”