How Family Offices Are Using Funds to Access “Risky” Asset Classes Like Crypto

Family offices have always been drawn to new, often speculative asset classes, but always with a certain degree of caution. The potential for outsized returns needs to be balanced against capital, governance and reputational risks. Bitcoin and crypto assets are no different. Interest is now widespread, yet many family offices remain cautious about handling exposure directly.

Delegating Rather Than Owning Complexity

Direct crypto investing introduces challenges that go well beyond market timing. Private key management, exchange counterparty risk, and custody arrangements require constant oversight. For family offices, these tasks are a headache. As such, family offices are increasingly turning to managed funds as a way to participate without taking on the full operational burden themselves.

Industry data supports this shift. According to recent global family office surveys, more than 70 percent of family offices with crypto exposure access it through funds or structured products rather than direct holdings. Among those without current exposure, operational risk and custody concerns are consistently cited as the primary reasons for staying on the sidelines.

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“Most family offices are not trying to become experts in wallet security or exchange infrastructure,” says Tom Hickey, Head of Distribution at Neverwinter Bitcoin Fund. “They want exposure to the asset class, but they want it in a way that works for them.”

Funds address this by centralising responsibility. Custody, execution, and security are handled by specialist providers, allowing investors to focus on asset allocation rather than operations.

Custody Risk Has Become a Key Factor

Custodial risk is becoming ever more important for institutional allocators. Over the past decade, billions of dollars’ worth of digital assets have been lost due to exchange failures. These events show that how and where crypto is held matters as much as what is held.

In response, the fund industry has evolved, with most established crypto funds now relying on institutional custody providers. This mirrors the standards applied in traditional markets and has helped lower one of the main barriers to entry for conservative capital.

“Family offices often tend to separate market risk from operational risk,” Hickey says. “They may accept volatility, but they are far less willing to accept avoidable custody failures. We’ve found many investors use funds to take that risk off the table.”

From Concentrated Bets to Structured Exposure

Another driver is portfolio construction. Early crypto exposure often meant holding a single asset, most commonly Bitcoin. Today, many funds offer diversified exposure across digital assets. The goal is not to eliminate volatility, but to manage concentration risk.

This evolution reflects broader institutional behaviour. In alternatives more generally, family offices have long favoured pooled vehicles that offer diversification and professional oversight. Crypto funds increasingly resemble these structures, with regular reporting, defined risk limits, and transparent governance.

Neverwinter operates within this broader trend, but it is far from unique. Across the industry, fund managers are adapting institutional tools to a volatile and fast-moving market. “What we are seeing is not speculation becoming safer,” Hickey notes. “It is speculation being handled more professionally.”

Scale, Costs, and Professional Execution

Cost efficiency also plays a role. Institutional funds have the benefit of scale often securing lower exchange fees and better terms than those available to individual investors. This is a big saver in the long term, as even modest savings in annual costs can significantly affect long-term outcomes.

In addition, algorithmic trading systems and data-driven models are now common across crypto funds, particularly in liquid markets such as Bitcoin derivatives. These systems respond to market conditions in real time, helping manage downside risk while maintaining exposure.

“Execution quality is one of the least visible but most important aspects of crypto investing,” Hickey says. “For most family offices, it is not something they want to build internally.”

A Pragmatic Route Into Volatile Markets

The growing use of funds does not imply that family offices see crypto as a low-risk asset. Volatility remains high, and regulatory frameworks continue to evolve. What has changed is the way long-term capital chooses to engage.

By delegating custody, execution, and infrastructure to professional managers, family offices can access new asset classes like Bitcoin without taking on responsibilities that sit outside their traditional remit. As digital assets continue to mature, this preference for structured exposure may help explain why funds have become the dominant entry point for family offices navigating crypto’s opportunities and uncertainties alike.