Crypto Digital Asset Fund – An Easy Way to Invest in Crypto for Family Offices?
Changes in interest rates, rising inflation and various macroeconomic developments are driving demand for diversification within family office investment portfolios. Digital assets, especially cryptocurrencies, NFTs, blockchain technologies and innovation within the digital asset ecosystem are thus attracting considerable interest.
According to a recent Goldman-Sachs investigation out of 150 family respondents globally, 15% globally and 25% in the Americas are already invested in cryptocurrencies. At the same time, nearly half indicated an interest in exposing themselves in the future. the Global Family Office Survey 2022 from BNY Mellon paints a similar picture, reporting that out of 200 respondents, three out of four family offices engage in cryptocurrencies by investing in or exploring them.
There is so much more to investing in crypto than just buying coins and for those considering this move, there are plenty of opportunities and yield strategies out there. A recent message from Sygnum gives a nice overview.
Fund managers and ETFs – the easiest way
There are several ways to facilitate family office crypto investments and leverage existing yield models such as crypto lending, staking, and yield farming, and for family offices, fund managers often offer the most convenient way to enter this space. Indeed, crypto and blockchain investment fund managers have a range of products specially designed for HNWIs, family offices and institutional investors. These products provide exposure to crypto and blockchain as asset classes, with investors having to bear the burden and responsibility of custody.
Most fund managers offer a range of funds with varying investment minimums, fee structures and liquidity schedules. Investment strategies can include passive or active management of cryptocurrencies, venture capital type investments in early stage protocols, venture capital funding in companies in the crypto or blockchain space and l ‘arbitration. Investor due diligence in these products resembles traditional funds and can potentially enable diversified exposure to digital assets.
As fund managers, ETFs help reduce the burden of direct investments in crypto assets. In the fall of 2021, the first Bitcoin-lined ETF began trading. Although US regulators have yet to approve ETFs that invest directly in digital currencies, several ETFs are offering wallets to take advantage of the growth in cryptocurrency and blockchain technology.
There are a few fund managers and ETFs that stand out when venturing into crypto and blockchain investments, including:
Bitwise is a fast-growing crypto asset manager with $1.3 billion in assets under management. The company is renowned for running the world’s largest crypto index fund (OTCQX: BITW) and pioneering products spanning bitcoin, Ethereum, DeFi, and crypto-focused stock indices. Bitwise strives to make it easier to invest in crypto.
As the investment climate changes and family office investors seek to create strong and diverse financial legacies, Shades of grey is a digital native asset manager with $40 billion in assets under management. The company offers single-asset, diversified and ETF products aligned with these goals.
Multicoin Capital is an investment company founded on a five-year thesis, specializing in investing in cryptocurrencies, tokens and blockchain companies. With $3 billion in assets under management, the organization operates a hedge and venture capital fund, investing in both public and private markets. As a crypto-native fund, Multicoin actively participates in networks through staking, custodial trades, liquidations, and more.
Founded in 2003, Pantera is a digital asset and blockchain investing veteran with $4 billion in assets under management. The company has been active in digital asset investments since 2013, when it founded the first Bitcoin fund. Pantera was the first US institutional asset manager to focus exclusively on blockchain and offers family office investors a full spectrum of exposure to the space. Their offering ranges from illiquid venture capital assets (including seed tokens and multi-stage venture capital funds) to more liquid assets like bitcoin and other cryptocurrencies.
pecunio billed as “the future of money”, is a decentralized investment platform. It offers investors a diversified portfolio of investment services. These include the Pecunio Crypto Currency Fund (PCC), Pecunio Venture Capital managed accounts, and the world’s first fully gold-backed (PGX) digital asset.
With over $4.4 billion in assets in its ETF suite, Amplify offers HNWIs and family offices seeking growth, income and risk management strategies expanded investment opportunities.
For family offices and HNWIs looking for something a little different, Overall X offers a range of investments that spans disruptive tech, equity income, hard-to-reach emerging markets, and dedicated blockchain and bitcoin funds.
ProShares offers an impressive range of ETFs with over $60 billion in assets. Strategies include dividend growth, interest rate hedged bonds and leveraged ETFs (leveraged and inverse).
Valkyrie is a financial services company focused on digital assets. The company offers family offices and HNWI investors the opportunity to gain exposure to the emerging digital asset economy through an actively managed traditional exchange-traded fund (ETF). Financial industry veterans lead Valkyrie with decades of experience at multiple companies including Guggenheim Partners, UBS, Chicago Board of Trade, Chicago Mercantile Exchange, and the World Bank.
VanEck is a global investment manager offering intelligently designed and forward-looking active and ETF solutions with value-added exposures to emerging industries, asset classes and markets. With a differentiated approach to traditional strategies, their product offering in the crypto exchange traded note (ETN) encompasses a range of digital assets and a crypto basket.
Unprecedented events continue to unfold in 2022. The war in Ukraine puts cryptocurrency and digital assets in the spotlight, drive accelerated innovation in the sector. Despite the risks associated with crypto and digital assets, their value as alternatives to fiat currency is becoming increasingly evident in these uncertain times. For HNWIs and family offices looking to diversify, these are valid considerations as part of a balanced portfolio. Fund managers and ETFs offer an easier way to enter this space and reap the maximum benefits from the start.