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Index Funds Are The Future Of Investing In Cryptocurrencies

New cryptocurrencies are launched every day, and the wave is still growing as innovations attempt to come to market. As coins continue to be introduced, it becomes more and more complicated for investors to know which ones to invest in. With over 1000 cryptocurrencies to choose from, investors are likely to face choice paralysis as volatility continues to rock the market and it becomes harder to weigh up and mitigate risk. Enter a solution that looks to take the pain out of filtering through the myriad of investment choices - The World’s First Cryptocurrency Index Funds.


What is a cryptocurrency index fund?

A traditional index fund is essentially a form of mutual investment whereby the portfolio of companies is based on a market index. Index funds offer automated trading which incurs much lower fees than managed funds. Index funds have consistently outperformed actively managed funds since their inception. Furthermore, they grew by $375 billion in 2015 while actively managed funds shrunk by $308 billion during the same year.  Managed funds require a vast amount of data, models, and analysts to make decisions and the majority still fail to beat the index. With an index fund, there is limited human intervention, and the process can be largely automated.

In the cryptocurrency world, index funds are used to track the performance of a certain number of cryptocurrencies. The rebalancing can be done either on a daily, weekly or monthly basis. Some investors would be interested in buying a portfolio of say, Bitcoin, Ethereum and Litecoin. Buying each of these individually is a complicated and time-consuming process. With an index fund, it is possible to invest in the top 10, 20 or 50 cryptocurrencies without having to do so manually.

Introducing the CRYPTO20 Index fund

CRYPTO20 already has a solution that is set to revolutionize the way investors profit from cryptocurrencies. This experienced team has been testing top cryptocurrencies for over a year, with promising results showing that their crypto index fund investing strategy generates higher returns for investors. Now, with a proven data-science backed method, they are ready to roll out the product to the open market and allow everyday investors a more comfortable and potentially more profitable way of investing in cryptocurrencies.


Similar to the S&P500 which tracks the top 500 US companies, CRYPTO20 is the first tokenized crypto-only index fund that tracks the top 20 cryptocurrencies. Since the top 20 coins change over time, CRYPTO20’s holdings will too - this mitigates risk and volatility. Also, any currency in the CRYPTO20 fund can only have a maximum value of 10% of the total fund value.  Therefore no single currency will dominate the index.

The process is principally automated which ensures low annual fees of only 0.5%. However, there is still some level of human intervention in verifying the type of coins in the top 20 to ensure the fund does not invest in legally questionable projects. CRYPTO20 is directly linked to the 20 underlying assets via the smart contract.

This arrangement gives an investor a diverse, low risk and high return investment compared to owning a single token. With risk spread over the top 20 cryptocurrencies, investors can enjoy peace of mind instead of investing in a single cryptocurrency which is often volatile and presents a high-risk investment profile.

Click the video above to learn more about CRYPTO20

How investors can profit

As the underlying assets increase in value, CRYPTO20’s value will also increase. It is important to note that some of the cryptocurrencies in the portfolio may lose value while others grow, however, investors are protected due to diversification in risk exposure and rebalancing much like a traditional ETF on the S&P 500. Rebalancing ensures that there are changes in the type of funds that make up the index based on the current market capitalizations. Rebalancing is performed weekly, and therefore investors will have an opportunity to achieve returns from the best performing top 20 coins in any particular week.

Investors can feel assured of a balanced investment portfolio despite volatility in the market. There is no reliance on any single technology or source of risk, and the added advantage of smart contracts means investors can sell or exchange their tokens at any particular time and incur no exit fees.

With just one week left of their ICO, CRYPTO20 has already raised over $18 million from over 6,500 investors. The investor portal is currently open exclusively to ICO backers, and investors now have a final opportunity to buy tokens with either Bitcoin, Ethereum, or Litecoin.

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