SINGAPORE: When it comes to investing in early stage companies, there are no high returns without the high risks involved, analysts told CNA after the collapse of cryptocurrency exchange FTX.
, Tiger Global Management and the Ontario Teachers’ Pension Plan, which also wrote off its investment.“As with all investments, risks are inherent,” said Professor Lawrence Loh, director of National University of Singapore Business School’s Centre for Governance and Sustainability. “Up till the collapse of FTX and other cryptocurrency firms, the question that would have been posed to Temasek, if they had never invested, would have been: 'Why aren't you investing in this high return space?'Assoc Prof Theseira added that these are essentially the same question – investment managers are criticised for missing out on potentially high returns when no investment is made, and for taking high risks if an investment fails.
“Idiosyncratic risk is high because in general, crypto firms have been founded and run by persons with relatively little established track record,” he said, noting that FTX is a good example of this. He added that investing in such spaces may not be for everyone, particularly retail investors. But ignoring them entirely may be"regressive".
Large investment firms need to invest in every major emerging investment asset class that is available, pointed out Assoc Prof Theseira.