Index Fund
An Index Fund is a fund that is based on a basket of underlying investments. ETFs (exchange traded funds) are typical examples from the stock market where the concept originally originated. The year 2017 saw significant increases in the market capitalization of cryptocurrencies and hence the concept of index funds gained more popularity in the crypto space. The idea is to create one index fund that is invested in all cryptocurrencies proportional to their market capitalization. Somebody who is trading an index fund would hence participate from the gains realized in the whole cryptomarket space and would not depend on the performance of individual coins. Since it difficult for small traders to follow such a strategy index funds are offered by other operators in the market, that commonly charge a commission for their service.
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Index Funds targeting cryptocurrencies
As the overall market capitalization is yet relatively small compared to the market capitalization of the stock market, the number of index funds in the cryptocurrency field is limited. Current attempts to replicate a passive performance of a basket of cryptocurrencies include:
Cryptos Fund
The Cryptos Fund (Bloomberg: CRYPTOS KY; ISIN: KYG2577B1077) is the largest regulated passive index tracker in the cryptocurrency space. It replicates the , which is comprised of the 30 largest cryptocurrencies, weighted using a smoothed measure of their market cap, which allows for a reduced correlation to Bitcoin.
Bitwise HOLD 10 Index
The Bitwise HOLD 10 Index claims to be the world’s first cryptocurrency index fund. It claims to holds the top 10 cryptocurrencies weighted by 5-year diluted market capitalization and is rebalanced monthly. As of early 2018 the fund was only open to accredited investors with a $25,000 minimum investment.
Coinbase Index Fund
On March 6th 2018 Coinbase announced a new Index Fund. Initially the fund should only be available to US-resident, accredited investors.
Crypto20 Fund
The Crypto20 Fund is the first tokenized crypto index fund. It is a closed-end fund traded on exchanges such as HitBTC and Bibox. The fund tracks the top twenty cryptocurrency assets by market capitalization, and the portfolio is revised weekly to align the fund with the top twenty as consistently as possible. The fund’s management is passive, and the sole fee charged is 0.5% per annum. All profits are reinvested into the fund. Token holders can sell the C20 token on a supported exchange, or with the company via a unique redemption feature facilitated through an Ethereum smart contract. The fund aims to provide diversified exposure to the cryptocurrency market, with low risk and at a low cost.
Invictus Capital is the overarching company responsible for the Crypto20 Fund.
CombiCoin
The CombiCoin is an ERC 20 token that is backed by 30 cryptocurrencies.
Bit20
Bit20 is an index fund offered by BitShares exchange.
Cryptoindex
The Cryptoindex platform powered by AI that was built to create the Cryptocurrency market benchmark, known as the Cryptoindex100. It creates a “crypto portfolio” that chooses the right coins, based on our rules and filters, taking into account a coin’s overall ratings plus hundreds of other factors that affect their value.A Cryptocurrency index is analogous to a commodity or equity index. Cryptocurrency indices organize a certain number of digital currencies into a single diversified portfolio, creating an effortless, efficient investment signal that is easy to understand.
BlockState CTF15 Index Fund
The CTF15 (ISIN: CH0421235752) is bridging a smart-contract, digital asset basked to a fully securitized, traditional financial instrument enabling maximum transparency and security of the held NAVs. It uses a unique transparent, open-source pricing via DIA and has a minimum investment of EUR 10,000.