Morgan Creek Digitalexceeded its original target of $25 million for the fund. Itspitch: all traditional assets will eventually be represented bydigital tokens, while the influx of intellectual capital intodigital assets will create positive returns. (Photo:Bloomberg)

(Bloomberg) –Morgan Creek Digital has scored what it says isprobably the first investment in the crypto-asset universe from aU.S. pension fund.

Two pension plans in Fairfax County, Virginia are anchorinvestors in a new $40 million venture-capital fund, according to astatement from the company.

Other investors include an insurance company, a universityendowment and a private foundation, said Morgan Creek Digitalfounder Anthony Pompliano, who declined to provide furtherdetails.

Many institutional investors, which crypto enthusiasts believewill be drawn to digital assets because of their potentialout-sized gains, have been deterred by market manipulation and alack of regulation.

The Virginia pension funds join a handful of institutions toinvest in the crypto world, including Yale University, thesecond-largest endowment in higher education that invested in adigital assets fund last year.

Fairfax County Retirement Systems manages three separate definedbenefit plans, two of which invested in the Morgan Creek Digitalfund, said Pompliano.

Katherine Molnar, chief investment officer of one of the funds,said in a statement that blockchain technology, which was firstdeveloped to record the movement of Bitcoin, is an “emergingopportunity” that offers an “attractive asymmetric returnprofile.''

Pompliano said his new fund is structured like a traditionalventure capital fund that will invest in the equity of companies inthe blockchain and digital assets industry.

The fund will also hold a small percentage of its value inliquid cryptocurrencies, such as Bitcoin, said Pompliano. Bitcoinlost about 75 percent of its value in 2018.

“There's a belief in the institutional world that if theindustry will be around for a long time, it will be veryvaluable,'' Pompliano said in a phone interview. “The smart moneyis not distracted by price but looks at the long-term trends, andbelieves they're betting on innovation as a great way to deliverrisk-mitigated returns.''

Morgan Creek Digital, which is an affiliate of the investmentmanager Morgan Creek Capital Management LLC, exceeded its originaltarget of $25 million for the fund. Its pitch: All traditionalassets will eventually be represented by digital tokens, while theinflux of intellectual capital into digital assets will createpositive returns.

It also argues that cryptocurrencies are not correlated totraditional assets, giving investors unique exposures.

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