Crypto Currencies and Traditional Investment Portfolios. An Empirical Study on the Effects of Adding Crypto Currencies to Traditional Investment Portfolios

Textprobe:Kapitel 2.1.2, Norway Model (50/50 and 80/20):The history of the Norway model is based on the Norwegian Government Pension Fund, which was established in 1990. The fund's goal is to invest the yearly surplus generated by the Norwegian petroleum sector to provide for the period when the North Seas' oil reserves run out. With nearly 1.2 trillion USD (SWFI Institute, 2020) assets under management (AUM), the fund is the world's largest sovereign wealth fund. Corresponding to that, the fund owns nearly 1.4% of the globally available free float of stock. If examining the time period, the fund started to invest in shares as well; it achieved a better annual performance than the German DAX-Index with 6.1% over the 5.6% the DAX achieved (Clemens, 2018). Now it should be considered how this extraordinary performance has been achieved. The fund's investment approach is quite remarkable, as it is extremely simple. The fund invests only in a minimum number of different asset classes to achieve the risk-return objectives. Conventional investment classes such as equities, bonds, and cash are filling the bill (Koedijk, 2019). This approach provides certain benefits, including typically low costs and fees, high transparency, and the reduced risk of being scammed by a manager with poor performance.Consequently, a drawback of this strategy is the limitation in the asset allocation. The Norwegian model has been chosen for this paper because it has a very simple investment approach, which should be easily understandable for all readers in the context of the often non-trivial asset allocation topic. It is specified on two asset classes, equities, and bonds. The weighting, used in the scope of this study, of both, will be a portfolio of 50% equities and 50% bonds and a portfolio of 80% equities and 20% bonds. The methodology of the exact calculation and the exact allocation of Bitcoin is described in section 3.1.2.1.3, Balanced Portfolio Model:While the presented Norway model

Philipp Rosenbach completed studies of Business Administration (BSc.) and Finance (MSc.) at the Frankfurt School of Finance and Management. In the course of his studies, the author gained relevant experience within Audit, Private Equity and Investment Banking. Within his employment at the Frankfurt School Blockchain Center he released relevant publications in the areas of Blockchain, Crypto Currencies as well as Asset Allocation.