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I'm having a hard time understanding why organizations like the Ontario Teachers’ Pension Plan has money in uninsured crypto funds. Somebody has some explaining

I'm having a hard time understanding why organizations like the Ontario Teachers’ Pension Plan has money in uninsured crypto funds. Somebody has some explaining to do. Sequoia Writes Off Entire $210MM FTX Investment; Here Are All The Other Funds That Are Losing Billions In FTX https://www.zerohedge.com/markets/here-are-all-funds-are-about-lose-billions-ftx https://www.zerohedge.com/markets/here-are-all-funds-are-abo... Edit: 25 billion dollars up in smoke Ontario Teachers’ Pension Plan faces a hit on investment in crypto trading platform FTX https://archive.ph/V6Aw0 https://archive.ph/V6Aw0 No mention of it on the website https://www.otpp.com/en-ca/ https://www.otpp.com/en-ca/

wmf 4y ago
No good investments are insured and FTX isn't a fund.
- diab0lic 4y ago
  Plenty of good investments are insured. There are whole classes of investment that simply would not be sane to do without insurance. Taking an example from every day life: People buy investment properties and most of the time they insure them.
  - jrochkind1 4y ago
    Investment properties not generally insured against loss in market value, no matter how drastic.
    - deleted 4y ago
      [deleted]
    - diab0lic 4y ago
      Nobody ever claimed they did, but it is an investment, with insurance. If you want something more financial a short vertical spread [0] is a strategy in which you are purchasing insurance on the risk (investment) you just took (made). There are many such investments of this form. [0] https://www.optionsplaybook.com/option-strategies/short-call-spread/ https://www.optionsplaybook.com/option-strategies/short-call...
      - qeternity 4y ago
        What? Shorting call spreads is not how most people would protect a position. Perhaps you're thinking of a collar? (short calls to fund puts?)
        diab0lic 4y ago
        I’m not saying people sell these for insurance. One of the two options in this spread IS insurance. A short call spread is someone selling calls (option A in the link) and buying insurance on said sale (option B in the link).
mikeyouse 4y ago
The Ontario Teachers Pension Plan invests in tons of things, it's like CALPERS. They're present on the cap table of nearly every company you've heard of because they have a hundreds of billions of assets and are chasing yield. They didn't have money on FTX, but had invested in FTX like they do with tons of other VC investments.
yborg 4y ago
Not particularly fond of Zero Hedge, but "Scam Bankrupt Fraud" is kind of catchy.
mewse-hn 4y ago
He said the investment was part of Teachers’ strategy to learn about the crypto business and whether it gives the right balance of risks and returns. “I don’t think we have the answer to that question yet,” Mr. Taylor said. Holy shit.. they were openly investing in something they don't understand??
- snowwrestler 4y ago
  Nobody understands crypto from a financial perspective. That's why all the big crypto companies keep dying in new and interesting ways.
  - BLKNSLVR 4y ago
    Recently they seem to be dying in the exact same way: reinvesting customer funds.
    - snowwrestler 4y ago
      Sure, but lots of other kinds of financial institutions reinvest customer funds and don't die.
- RC_ITR 4y ago
  As others have said, those who understand crypto either chose to be conniving and make money off of the scam, or they avoid it. Mr. Taylor wanted to test if he could be conniving enough to profit and he turned out not to be (very few will be in the long run).
- iudqnolq 4y ago
  They have hundreds of billions, of which they set aside around 3% for risky bets. One of those risky bets failing isn't a big deal.
- brycelarkin 4y ago
  Investing a small amount in an industry to learn about it is pretty common with institutional investors.
iudqnolq 4y ago
OTPP is surprisingly big and very successful overall. And they invested at a $25B valuation, which is very different from investing $25B > Teachers first bought its FTX stake in October, 2021, as part of a US$420-million funding round. It was one of 69 investors, but FTX listed it first in its announcement of the financing. Teachers has never disclosed exactly how much it invested. > The pension plan housed the investment ... a portion of the portfolio dedicated to high-growth, yet high-risk, investments. As of June 30, the $8.2-billion portfolio represented just 3 per cent of Teachers’ $242.5-billion in assets. Teachers ... reported a 1.2-per-cent return for the six months ended June 30. By way of comparison, Royal Bank of Canada’s RBC I&TS All Plan Universe saw defined benefit pension plan assets ... shrink 14.7 per cent over that period.
moistly 4y ago
Because it's a tiny, infinitesimal part of their porfolio, a fraction of a percent, but one that has a many orders-of-magnitude potential gain. When dealing with as much money as the OTPP has, you have to form a very broad risk profile: for every super-secure, government-guaranteed dollar, spend a fraction of a penny on a super-risky but absolutely humongous payoff.

wmf 4y ago

No good investments are insured and FTX isn't a fund.

diab0lic 4y ago
Plenty of good investments are insured. There are whole classes of investment that simply would not be sane to do without insurance. Taking an example from every day life: People buy investment properties and most of the time they insure them.
- jrochkind1 4y ago
  Investment properties not generally insured against loss in market value, no matter how drastic.
  - deleted 4y ago
    [deleted]
  - diab0lic 4y ago
    Nobody ever claimed they did, but it is an investment, with insurance. If you want something more financial a short vertical spread [0] is a strategy in which you are purchasing insurance on the risk (investment) you just took (made). There are many such investments of this form. [0] https://www.optionsplaybook.com/option-strategies/short-call-spread/ https://www.optionsplaybook.com/option-strategies/short-call...
    - qeternity 4y ago
      What? Shorting call spreads is not how most people would protect a position. Perhaps you're thinking of a collar? (short calls to fund puts?)
      - diab0lic 4y ago
        I’m not saying people sell these for insurance. One of the two options in this spread IS insurance. A short call spread is someone selling calls (option A in the link) and buying insurance on said sale (option B in the link).

mikeyouse 4y ago

The Ontario Teachers Pension Plan invests in tons of things, it's like CALPERS. They're present on the cap table of nearly every company you've heard of because they have a hundreds of billions of assets and are chasing yield. They didn't have money on FTX, but had invested in FTX like they do with tons of other VC investments.

yborg 4y ago

Not particularly fond of Zero Hedge, but "Scam Bankrupt Fraud" is kind of catchy.

mewse-hn 4y ago

He said the investment was part of Teachers’ strategy to learn about the crypto business and whether it gives the right balance of risks and returns. “I don’t think we have the answer to that question yet,” Mr. Taylor said. Holy shit.. they were openly investing in something they don't understand??

snowwrestler 4y ago
Nobody understands crypto from a financial perspective. That's why all the big crypto companies keep dying in new and interesting ways.
- BLKNSLVR 4y ago
  Recently they seem to be dying in the exact same way: reinvesting customer funds.
  - snowwrestler 4y ago
    Sure, but lots of other kinds of financial institutions reinvest customer funds and don't die.
RC_ITR 4y ago
As others have said, those who understand crypto either chose to be conniving and make money off of the scam, or they avoid it. Mr. Taylor wanted to test if he could be conniving enough to profit and he turned out not to be (very few will be in the long run).
iudqnolq 4y ago
They have hundreds of billions, of which they set aside around 3% for risky bets. One of those risky bets failing isn't a big deal.
brycelarkin 4y ago
Investing a small amount in an industry to learn about it is pretty common with institutional investors.

iudqnolq 4y ago

OTPP is surprisingly big and very successful overall. And they invested at a $25B valuation, which is very different from investing $25B > Teachers first bought its FTX stake in October, 2021, as part of a US$420-million funding round. It was one of 69 investors, but FTX listed it first in its announcement of the financing. Teachers has never disclosed exactly how much it invested. > The pension plan housed the investment ... a portion of the portfolio dedicated to high-growth, yet high-risk, investments. As of June 30, the $8.2-billion portfolio represented just 3 per cent of Teachers’ $242.5-billion in assets. Teachers ... reported a 1.2-per-cent return for the six months ended June 30. By way of comparison, Royal Bank of Canada’s RBC I&TS All Plan Universe saw defined benefit pension plan assets ... shrink 14.7 per cent over that period.

moistly 4y ago

Because it's a tiny, infinitesimal part of their porfolio, a fraction of a percent, but one that has a many orders-of-magnitude potential gain. When dealing with as much money as the OTPP has, you have to form a very broad risk profile: for every super-secure, government-guaranteed dollar, spend a fraction of a penny on a super-risky but absolutely humongous payoff.