How Are Crypto Funds Performing
In 2017, a wave of new digital currency funds have entered the market to benefit from the high returns potential of digital assets. But how well have these and other crypto funds performed since their inception?
Digital Asset Investment Platforms
The tokenized close-ended digital asset fund TaaS has generated a return on investment of generated a return on asset (ROA) of 61% in its first quarter and 72% ROA in its second quarter of trading, which ended in October 2017, the fund said on its website. Throughout that six-month period the TaaS fund managers traded over 70 cryptocurrencies and invested in over a dozen token sales.
Conversely, the so-called “Digital Asset Arrays” (crypto funds managed by cryptocurrency experts) on the Iconomi Digital Asset Investment Platform have generated a range of different returns for their investors. For example, the Crypto Crush Core (CCC) fund managed by Victor Lai generated a return of 240% since its inception three months ago while the Greychain Emerging Markets (GEM) fund managed by Steven Reynolds only generated 109 percent return in the same time period. Given that bitcoin has generated a return of around 75% in the same three-month, both these funds have outperformed bitcoin. In fact, all available funds on the Iconomi investment platform have outperformed bitcoin in the last three months as popular altcoins reached new all-time highs in December and January.
Crypto Hedge Funds
According to Hedge Fund Research, crypto hedge funds have generated a return on investment of 1,641% in the period from January to November 2017. Furthermore, the HFR’s Cryptocurrency Index, which illustrates the returns of crypto hedge funds, shows that digital currency hedge funds have generated an annualized return on investment of 292% since its performance data started in 2015.
Cryptocurrency Investment Trusts
Grayscale’s’ Bitcoin Investment Trust has generated a return on investment of over 7,900% since its inception in 2013. The ZCash Investment Trust, which was launched in November 2017, is up 110% and the Ethereum Classic Trust has generated a return on investment of over 650% since its launch in April 2017.
Crypto Index Tracker Funds
In regards to crypto index funds, there is little to no data available as these are some of the newest funds in the cryptocurrency market. However, as most index funds track the 10 to 20 largest cryptocurrencies, we can assume that the performance of most index funds reflects that of the leading digital assets in the market.
Interestingly, according to research conducted by cryptocurrency enthusiast Willy Woo, a theoretical index fund composed of the top ten altcoins - rebalanced every 30 days to incorporate new entrants - underperformed bitcoin in the period between October 16, 2013, and October 16, 2016. This would suggest that bitcoin should be an integral holding of a cryptocurrency investment portfolio as it is an excellent long-term performer. This, of course would be the case for all market capitalization-weighted index funds as bitcoin current makes up 34% of the cryptocurrency market value.
Also, as it is covered in our introduction to crypto funds, one should remember that funds charge an annual management fee that has to be taken in consideration and subtracted from the annual returns.