• Insider spoke to Morningstar’s Amy Arnott, who leads the research firm’s coverage of ether.
  • Arnott emphasized its extreme volatility, and how even a 2% weighting could “dramatically increase” a portfolio’s risk profile.
  • However, that volatility appeals to a certain type of investor, due to ether’s low, or negative correlation with stocks and the US dollar.

Like many other cryptocurrencies, ether is an extremely volatile investment asset. Traders love it, regulators hate it and many longer-term investors are still on the fence about what role crypto might play in their portfolios.

Amy Arnott, a portfolio strategist at Morningstar, has crunched the numbers to come up with the ideal weighting for ether in a traditional portfolio. And it’s a lot lower than a lot of crypto investors might think.

“If you talk to crypto fans, a lot wouldn’t care about that day-to-day volatility because they’re holding for 20 years,” she told Insider. “Obviously, there have been huge rewards for people who got in early, say in 2015, but also it’s been subject to very large drawdowns like we saw in 2018 and over the past few months.”

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