Shinhan Sees 2% Digital Asset Allocation as Risk-Adjusted Goldmine

Shinhan Investment Securities in South Korea has proposed that investors allocate 2% of their portfolios to digital assets, such as cryptocurrencies like Bitcoin. This recommendation comes after an analysis found that a portfolio with an 8-to-2 ratio of gold to Bitcoin produced relatively favorable risk-adjusted results.

The traditional 60% stock and 40% bond strategy has struggled to provide the diversification investors once expected due to increasing correlation between stocks and bonds, according to senior researcher Park Woo-yeol.

Shinhan recommends allocating 8% of portfolios to alternative assets, with the remaining 90% in traditional stocks and bonds. The firm began recommending a 2% digital asset weighting this year after examining the risk-adjusted performance of portfolios that divided a 10% alternative allocation between gold and Bitcoin.

South Korea is gradually opening its financial system to digital assets, including plans for crypto ETFs, stablecoins, tokenized government bonds, and other blockchain initiatives. The country's Digital Asset Basic Act and framework for cross-border stablecoin transactions are being prepared.