How to get exposure to a diversified basket of cryptocurrencies without the hassle of owning all the individual cryptos? Here I review index fund options for crypto in 2019.
Why Index Funds?
There are great benefits to owning the market by tracking an index, such as lower cost and lower risk through diversification.
Traditional markets such as equity stocks, debt and bonds and corporate real estate have been spoiled with a range of mutual index funds and exchange traded funds (ETFs) for decades.
Back in 2017 when I entered the crypto space there were few options. I played the fool’s active guessing game. I picked what I thought would be winning cryptocurrencies and held them in anticipation of someone paying me more for them in the future. When the price did rise showing modest gains, I got greedy. I held onto “my” picks. Who can forget the 2018 crypto market tanking in spectacular fashion?
I learned a great deal about my risk tolerance. I became interested in passive index tracking strategies
What options do we have in 2019 to invest in cryptocurrencies and the blockchain directly, but without actively picking a winner? I set out to review cryptocurrency index funds.
The Cryptocurrency Indices
First, what indices exist in the crypto market? I found two:
- The CRIX
- open source, weighted by market cap
- dynamic number component cryptocurrencies, currently 5
- Riven & Scevola’s The Crypto Currencies Index (CCI30)
- The top 30 cryptocurrences weighted for market capitalisation
The Cryptocurrency Index Funds
These are funds or instruments that can actually be invested in. Note that not all are passively managed and there is some innovation.
Funds
- Amun Crypto Basket ETP (HODL5)
- Switzerland
- ISIN: CH0445689208
- Top 5 cryptocurrencies by market capitalisation
- Rebalanced monthly
- Minimum 3%, maximum 50% weighting for any one crypto
- Annual fee: 2.5%
- Riven & Scevola’s Cryptos Fund
- SIN: KYG2577B1077
- Cayman Islands
- Top 30 cryptocurrencies, tracks the CCI30 index
- Rebalanced monthly
- Minimum USD $100,000 investment
- Annual fee: 0.99%
Blockchain Tokens (Ethereum ERC20)
- Invictus Captial’s Crypto20 (C20)
- Cayman Islands
- Ethereum ERC20 token
- Top 20 cryptocurrency assets by market capitalisation
- Maximum weighting of 10% for any one cryptocurrency
- Rebalanced weekly
- Annual fee: 0.5%
- Invictus Captial’s Crypto10 Hedged (C10 Hedged)
- Cayman Islands
- Top 10 cryptocurrency assets by market capitalisation
- Maximum weighting of 15% for any one cryptocurrency
- passive management with dynamic cash allocation to manage downside risk
- Rebalanced weekly
- Annual fee: 1.7%
- ICO tokens distributed. Invest directly.
- Invictus Captial’s Hyperion Fund (IHF)
- Cayman Islands
- Invest in a range of initial coin offerings (ICOs)
- Entry and exit fees
- Annual fee: 2%
- Markets: Liquid, IDEX, DFlow
- Iconomi’s Blockchain Index (BLX)
- Malta
- Top 30 cryptocurrencies by market capitalisation
- Other digital portfolios available
- Maximum weighting of 25% for any one cryptocurrency
- Rebalanced monthly
- Annual fee: 3%
- CryptoIndex100 (CIX100)
- Malta
- 100 crypto currencies
- Active management with “Zorax” AI using 150 trading and 50 sentiment factors
- Rebalanced monthly
- Back-testing beats market by up to 80%
- ICO over. Not yet exchange listed
Other Beasts
- Triaconta
- The Netherlands
- Instantly buy a bundle of cryptocurrencies in EURO
- Big 3, Top 30 or Penny Stock index bundles / portfolios
- Granular, paid control of re-balancing and more
- Rebalanced every 2 months
- Entry and exit fees
- Annual fee: around 4.8% with 6 re-balances
Analysis
Most index funds weight their portfolio in proportion to the top x number of cryptocurrencies. Most funds rebalance monthly.
For a pure passive approach, Invictus Capital’s Crypto20 token is a clear innovator at only 0.5% annual fees with weekly rebalancing. Riven & Scevola’s Cryptos Fund costs basically double for marginal extra market coverage.
The model for the Invictus Captial’s Crypto10 Hedged (C10 Hedged) token offers automated and passive weekly rebalancing, compelling strategy and downside risk protection at additional cost.
Triaconta offers a do-it-yourself type strategy appealing to the masses with add-ons for paid rebalancing events. It seems all trading is on their website. This means Triaconta have your private keys, like an exchange holds your private keys, or even Revolut’s managed cryptocurrency holding.
Conclusion
I prefer to hold an actual blockchain token on the blockchain when investing in blockchain technology. The index products from Invictus Captial are a compelling blockchain option available right now. How have you invested in the cryptocurrency market?
Let me know in the comments below if you found this useful and if you’d like to see my complete geeky spreadsheet.
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