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A recent note from Jeff Weiler, Executive Director of Fairfax County Retirement Systems, revealed that the employees and Police Officers Retirement Systems have invested in distributed ledger technology (DLT) or simply blockchain technology; the same technology about which cryptocurrencies like Bitcoin, Ethereum, Litecoin etc. are based.
A number of questions have been raised in order to understand this blockchain investment, and Weiler and the investment team have tried to answer many of them in the note released on the Fairfax county Gov website.
The employees and Police Retirement Systems have invested in one of the blockchain-based funds managed by Morgan Creek Asset Management company. The company is established in Chapel Hill, North Carolina and has a total of $1.4 billion in asset under management through a number of equities & debts fund. Morgan Creek Blockchain Opportunities Fund is one of them and that’s where Fairfax has invested certain percent of the total assets.
The ERS or Employees’ Retirement System has invested 0.3% of the ERS’s total assets which is about $10 million. In addition, the Police Officers Retirement System (PORS) has invested 0.8% of POR’s total assets which is around $11 million.
Talking about Morgan Creek Blockchain Opportunities Fund, currently the fund has no direct exposure to any cryptocurrencies. Similar to thematic equity funds, this Morgan Creek fund will invest in companies that develop and utilize blockchain technology. At least 85% of the Morgan Creek Blockchain Opportunities Fund will be invested in these blockchain firms limiting the direct crypto exposure to 15%.
The staff and Board of Trustees members of both the ERS and the PORS have spent a significant amount of time and effort to make this investment happen. They approached the Morgan Creek team directly through regular monthly meetings which included a long discussion among the board members, staff, and Morgan Creek itself. County attorneys and outside investment counsel spent a lot of time and energy to ensure that the Fairfax County’s interests were answered.
On the associated risk with these investments, Weiler has also said that almost every investment is subjected to risk and this investment is no different. However, Fairfax’s investment team has made it sure that the expected returns from this investment are worth taking the risk.