The Role of Ethereum in an Investment Portfolio

In the second part of our series looking at the promise and peril of Ethereum, we consider its effect on a diversified portfolio

Amy C. Arnott 21 July, 2021 | 10:05AM
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Ethereum

We recently covered some of the basics of Ethereum for investors curious about the cryptocurrency space. Now it’s time to focus on ether (the official name for the Ethereum protocol’s native currency) as an investment asset.

Ether is so volatile that you could argue (and crypto aficionados probably will) that it doesn’t really fit into a traditional portfolio analysis framework. It’s more of a speculative play on the long-term shift toward digital money and an ongoing revolution in the financial technology landscape. Even so, investors tempted to make a bet on ether should proceed with caution and keep in mind that even small doses of ether can dramatically change a portfolio’s risk profile.

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Amy C. Arnott  Amy C. Arnott, CFA, is director of securities analysis for Morningstar.