Crypto Investment Funds – Is it worth investing in crypto now?
Crypto Investment Funds – Risks
Cryptocurrency industry attracts more and more investors with each year regardless volatility or exchange rate of top cryptocurrencies. Cryptocurrencies are considered as high-risk investments, so it’s recommended to study the market and particular digital assets before investing. Extended research usually helps investors to minimize or at least reduce the risks, but authorised crypto funds or specific wealth management companies with crypto investment products will handle your investments more professionally, so it’s better to transfer your assets to professional niche-relevant wealth managers.
However, investing in crypto funds with long performance history and strong reputation cannot be considered as low-risk investment opportunity due to extremely high market volatility, which is significantly different from traditional stock market. Cutting-edge financial technologies become the basis for the emergence of investment funds that manage capital denominated in digital assets, such as Bitcoin, Ethereum, Ripple and Polygon.
Investing in Crypto Funds – How it works?
Crypto Fund is a company that provides investment services to private investors similarly to traditional mutual funds and investment management companies, but their activities are limited to digital assets market.
Basically, cryptocurrency asset managers will conduct the entire process of building client’s investment portfolio through searching the most-income producing investment opportunities on the market. Portfolio managers will determina the right strategy that matches your risk profile and financial goals. As portfolio managers believe, selected holdings can generate profits that will be distributed among investors according to the terms of investment offering memorandum. Crypto investment funds charge usually charge subscription, management and performance fee, as traditional mutual funds do.
There are two categories of crypto funds:
1. The Funds that invest in start-ups and ICOs
Profitability of such funds is mostly linked to popularity of the product that was funded. This is more likely long-term investment opportunity because the products usually require 2-3 years and several successful funding rounds to get integrated into the market and start generating high-value cashflow. Such funds work similarly to venture funding, and also involves a high degree of risk.
2. Crypto Hedge Funds
Crypto Hedge Funds suit better for investors who are looking for short-term investments for the period of up to 3 years or even up to one year. Each crypto fund has its own strategy for interaction with investors but generally the assets are allocated the following ways:
– Buying income-producing cryptocurrencies
This usually includes TOP-20 assets by market capitalization, but each funds has it’s own asset allocation strategy, so it may be TOP-10 as well as Top-50.
– Buying altcoins, under-valued and under-researched digital assets
Altcoins is considered as more risky investment than top-performing and highly-liquid cryptocurrencies. There are liquidity, security and business failure risks involved, so the competence of portfolio manager plays major role in performance of such investment and future results that will be achieve by management team. Moreover, access to insider information from development team and founders provide a great benefit.
Investing in Crypto Hedge Funds
Crypto hedge funds charges a few types of commissions for investment management services. Most of Crypto Hedge Funds do not allow withdrawal of funds before the date specified in subscription agreement. However, there are some crypto funds with frequent income distribution and low fee for early redemption of invested funds in case of any unexpected events.
For example, Einvestment Fund offers investment products with monthly income distribution and strong performance history since Fund’s inception in 2018. As of July 17, 2021, almost 30% of portfolio holdings consist of crypto assets, while remaining 2/3 are allocated to other economy sectors. That’s so-called hybrid allocation intended to improve portfolio diversification and ensure high performance through partial allocation to cryptocurrencies. To find more information about portfolio performance and allocation strategies, feel free to find the relevant information on high income portfolio page.
Onshore and Offshore Crypto Funds
With Einvestment mutual fund platform, you can invest with Bitcoin while your subscription agreement and income distributions will be denominated in Euros, as the base currency of investment products offered by the fund. Moreover, the fund is domiciled in the Cayman Islands. Cayman Islands is a tax-efficient offshore jurisdiction for offshore investment funds and wealth management companies.
Investing with offshore funds may enhance your returns and reduce the costs, while giving unlimited access to global markets and better diversification through allocation of funds to large number of international markets, asset classes, currencies and industries. Portfolio managers of Einvestment Fund employ both active and passive strategies to generate high level of current income as the fund’s primary objective, and appreciate capital as a secondary objective, while delivering tax-efficient investing experience to investors.
The volatility of the cryptocurrency market raises doubts about future results and overall performance of crypto investments in the next years, but deep research is the key to choose the right investment management companies with professional team, who will bring you to your financial goals and meet or even exceed your expectations.
ESG Crypto Funds
ESG (Environmental, Society, Governance) investing and ESG Funds are now becoming increasingly important for investors, including the ones who invest in cryptocurrencies. As you probably know, mining of cryptocurrencies harms environment in case the mining enterprise doesn’t use renewable energy as a source of electricity.
Some big market players already started ESG transformation to follow the trend and become a carbon-negative companies and move beyond discussions. According to Coindesk rundown, Crypto.com, CoinShares and OneRiver are working on transforming business to make it ESG compliant. In addition to making the world a better place, the firstcomers of sustainable investing on the crypto market also get additional marketing opportunity and extra reputational benefits.
As of today, the market is falling and there is no clear vision on the trend in the nearest due to large number of common and industry-specific factors, including restrictions in China, criminal complaints against Binance in Thailand, as well as it’s issues with processing bank transfers through UK banks. Nevertheless, historical performance of digital assets confirms that it’s possible to double your investment much sooner than it’s doable with traditional financial products and mutual funds.
If you are ready to take the risks, crypto funds worth to allocate up to 20% of your investment portfolio with a short-time horizon. If you are looking to invest for retirement and hold your investment for over 10 years, it’s better to reduce the share of crypto assets to 10-12% and put more emphasis on stable, low-volatile and safe investment options.