Fidelity Investments is one of the largest asset managers in the world, with $4.5 trillion in assets under management. Recently, Jurrien Timmer, Fidelity’s Director of Global Macro, published a risk-reward analysis on different assets, including Bitcoin (BTC).
According to Timmer, Bitcoin’s risk-reward is “in a different universe”, as reported by Bitcoin Magazine on X (Twitter).
Essentially, financial institutions analyze risk and reward on financial assets crossing annualized volatility to annualized return. Annualized return is the average amount an investment generates each year over a given period. Higher annual returns imply better long-term profitability.
Risk vs. Return: 2020-2023, weekly data. Source: Fidelity Investments
Interestingly, the second best-performing asset is the SPX on the stock market, with a return going from 16-26% and a risk between 18 to 24 standard deviations. China has had the second-higher risk with an annualized volatility between 25 to 28 while accruing negative returns in the 3-year period.
