‘You're accessing an institutional quality investment where there are institutional players that are supporting it,’ says CI’s Geraldo Ferreira
Canadian institutional investors have long watched from the sidelines as their American counterparts wade deeper into digital assets.
In the US, Bitcoin ETF assets have ballooned to roughly $150 billion in just over a year, whereas in Canada, total digital asset ETF holdings sit at approximately $8.6 billion after five years, notably after the first Bitcoin ETF launched back in 2021. But Geraldo Ferreira, senior vice-president and head of investment products and manager oversight at CI Global Asset Management, believes this disparity is rooted in temperament among Canadian investors rather than opportunity.
"I think there's an inherent conservatism with Canadian institutional investors," he said. “I think a pension plan is probably the most conservative, because a portfolio will have different objectives, will have different risk tolerances, etc. But as time progresses, I think there is potential for adoption,” said Ferreria, pointing to Canadian pension plans, like Ontario Teachers' and La Caisse who have previously invested “in the ecosystem” of digital assets.
“The asset class is still relatively nascent, it’s still growing,” he added.
Ferreira noted that performance is the primary driver of interest in digital assets, highlighting his team benchmarked Bitcoin and Ethereum against traditional asset classes like gold and the Nasdaq over a decade, tracking total returns year by year. Bitcoin came out on top more often than any other asset class. Three-year returns showed particularly striking growth.
But he also acknowledges the trade-off: volatility remains high, and the standard deviation can unsettle conservative investors. But his team's modeling shows that even modest exposure like one or two per cent improves a portfolio's Sharpe ratio and overall risk-adjusted returns. The lower correlation between digital assets and traditional equities makes them effective diversifiers and potential inflation hedges.
Ferreira frames the case for digital assets around diversification, noting the diversification benefit stems from Bitcoin's lower correlation to traditional equities and fixed income. For example, Ferreira points to year-over-year performance data showing Bitcoin and US large caps moving at different speeds - in 2023, Bitcoin returned 153 per cent while large caps delivered around 26 per cent.
Even during COVID's 2022 tail event, when nearly everything fell together, the correlation data supports the case for inclusion.
"Not everything is all going up at the same pace, and everything isn't all going down at the same pace," he said.
Yet, where digital assets sit within a portfolio structure also varies as they could slot into an alternatives sleeve alongside private credit and venture capital or join real assets next to real estate holdings, explained Ferreira. While assets like Ether and Solana, with their technology underpinnings, might fit better in a growth or venture-capital allocation, Ferreira emphasized that adding any new position means trimming something else, so investors need conviction in their macro views before making room.
He also notes that portfolios can evolve as gains can be harvested and redeployed elsewhere as valuations shift.
Ferreira sees ETFs as the most straightforward route for institutions seeking digital asset exposure, pointing to convenience as the core argument for ETF access. After all, he emphasized most institutions already trading on major exchanges can add digital asset exposure without new infrastructure or operational headaches.
"If they're already trading securities on the New York Stock Exchange or the Toronto Stock Exchange, an ETF is just another security that's on those exchanges," he said, adding that the wrapper brings institutional-grade custody, auditing, regulatory oversight, and counterparties with established track records. None of that is guaranteed when setting up a digital wallet and transacting directly, said Ferreira.
"You're accessing an institutional quality investment where there are institutional players that are supporting it, that are audited, secure and liquid," he noted.
The ETF structure also filters out risk, according to Ferreira. Bitcoin dominates the Canadian digital ETF market at roughly 70 per cent of assets, followed by Ethereum and smaller allocations to Solana and XRP.
In the US, Bitcoin's share runs even higher at around 85 per cent. Regulators have approved these assets because they are established and their blockchains have proven durable. The hundreds of other cryptocurrencies - tokens whose blockchains could collapse overnight - remain outside the ETF universe.
Ferreira acknowledges that a pension fund could theoretically go direct and access the entire crypto market. But he sees little reason for conservative investors to take that path.
"I think there's just so much more risk than just accessing it via the ETF," said Ferreira.
Yet, the limitation, he acknowledges, is that all this analysis looks backward. While history can show how Bitcoin performed relative to equities or fixed income, it can’t predict the future.
That is where qualitative judgment comes in, underscored Ferreria, emphasizing that portfolio managers must weigh whether digital assets belong alongside other alternatives like private credit and private equity, and whether the regulatory environment is evolving in ways that make the market safer and more transparent.
He suggests investors need to balance objective back testing with subjective forward-looking views on asset classes and the macro environment.
Still, he sees growing institutional adoption as a sign of the asset class maturing, pointing to BlackRock and Fidelity, while regulatory frameworks are taking shape in Europe and the United States. And while pension managers remain the most cautious, Ferreira believes broader adoption is inevitable.
"It's happening in the United States, and I think it's an eventuality that may start happening here in Canada. I just think it's really about time," he said.
