Fairfax County highlights value of yield farming’s ‘short-term nature’

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Fairfax County, Virginia continues to be a leading public institutional investor in cryptocurrency and is poised to diversify its portfolio into yield farming.

As previously reported, global asset managers VanEck announced that Fairfax Employee and Police Retirement Systems will invest $35 million in the company’s crypto loan fund. This is the latest investment move by the two county-managed funds into the cryptocurrency space since their initial foray began in 2018.

TAUT reached out to Andy Spellar, the chief investment officer of the Fairfax Employee Retirement System, to unpack their investment in VanEck’s crypto loan fund and the reasoning behind it.

Spellar confirmed that the Employees Retirement System (ERS) had committed $25 million to the fund while the Police Retirement System (PORS) had pledged $10 million. The investment will take place between July and September of this year, depending on market conditions.

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A first installment has already been received by VanEck, with Spellar revealing that ERS and PORS have invested $10 million and $5 million respectively for the month of July.

This move is certainly good news for the cryptocurrency space, which is currently experiencing a severe downturn alongside conventional stock markets around the world. The decentralized finance (DeFi) sector arguably suffered the most, with the collapse of the algorithmic stablecoin Terra causing a cascading effect throughout the space.

Related: Survey Shows 55% of Crypto Investors Chose HODL as Bitcoin and Altcoin Prices Crash

As the broader cryptocurrency ecosystem weathers the storm, investment programs and funds like Fairfax County’s ERS and PORS continue to see the value offered by the sector, as has Spellar told TAUT:

“We looked at space as a diversifier with our credit/high yield portfolios and in particular performance timeframes as the very short term (1-3 month) nature of the positions.”

Spellar gave food for thought on current market conditions, noting that a basic risk-adjusted outlook suggests cryptocurrency markets haven’t outsold high-growth sectors like tech, science, and more. of life or government bonds:

“We haven’t seen anything to counter the long-term thesis that more and less will be digitized in the future, including traditional assets themselves. These types of markets are shaking up weak players and technologies and are generally healthy for markets and industries.

The ERS and PORS funds have managed to fare well amid the market sell-off due to their broadly diversified portfolios. Spellar noted that the two are the best performing public funds in the short and long term time domains and expects the last quarter of the year to be no different in terms of performance.

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Although the first six months of 2022 will be one of the worst performance periods on record, Fairfax expects both systems to be the best performers in the decile over the period. Spellar said the digital asset segment of its portfolio is very small, with the vast majority made up of traditional venture capital investments.