The Fairfax County Police Department’s $2 billion pension fund plans to add cryptocurrency investment managers this month, furthering its years-long strategy in alternative finance.
The Fairfax County Police Officers Retirement System has invested in the emerging financial space since 2019, starting with blockchain technology, and it’s now slated to add two more fund managers who could get a share of the profits.
Katherine Molnar, the chief investment officer for the fund, discussed the expected move on a panel about alternative financial investments at the Milken Institute Global Conference in Beverly Hills, California, on May 3.
“Along with our sister plan, the Fairfax County Employees’ Retirement System, we believe that we’re the first two public pensions in the U.S. to have allocated to this space,” Molnar said.
The new investments involve yield farming, a cryptocurrency strategy that’s been likened to interest on savings for traditional bank customers. The return on the investments could be between 4% and 1,000%, Molnar said.
According to the county, the pension fund already has a revenue-sharing agreement with the firm Parataxis Capital, and the police retirement system’s Board of Trustees is considering two more such agreements with the yield-farming additions.
Fairfax County police officers contribute 8.65% of their regular pay to the department’s pension fund, which increased 23.3%, or nearly $409 million, during the previous fiscal year that ended June 30, 2021.
According to Molnar, third-party managers direct the crypto investment funds to blockchain technology and infrastructure for cryptocurrency markets, such as digital wallets. The county said its investments also support cryptocurrencies and digital assets.
“I’ve allocated about…5% to this space,” Molnar said, adding that target investments have seen considerable growth but also complicated rebalancing efforts.
According to an annual report for the pension fund, commission percentages range from 0.05% to o.24%, costing $136,249 in base commissions for fiscal year 2021. Management, custodial and consulting fees, and other expenses costed $19.7 million during that time.