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5 Things to Know About Crypto Hedge Funds

5 Things to Know About Crypto Hedge Funds
(David Watmough/Dreamstime)

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Thursday, 12 September 2019 05:58 PM Current | Bio | Archive

In a bid to bridge the gap between institutional investors and the current reach of crypto hedge funds, the Elwood Asset Management firm is developing a new portfolio platform of crypto-based funds for institutional investors.

Owned by British billionaire Alan Howard, Elwood’s $1 billion venture is set to invest in some 50 crypto hedge funds that could include US Capital Global Securities and Prime Factor Capital, according to media reports.

A study authored and released by Elwood and PWC in May found that there are 150 active crypto hedge funds with $1 billion in assets under management not including index funds and venture capital funds.

“The crypto hedge fund space is just one part of a much broader ecosystem of digital assets around which there is increasing evidence of institutionalization,” said Bin Ren, CEO of Elwood.

“This broader interest from investors and regulators is undoubtedly a positive step towards digital assets being recognized as an asset class with true viability and longevity,” said Ren.

The study further found that hedge funds outperformed the benchmark with the median fund returning -46% in 2018 compared to a Bitcoin benchmark of -72%.

However, greater transparency and education is needed, according to Ren, and Elwood plans to vet the hedge funds with the company’s due diligence in order to minimize volatility.

In March, Elwood and Invesco launched a blockchain ETF.

“We believe the potential for blockchain to change the global economy is greatly underappreciated in today’s market, much like the internet was in the beginning, when most people couldn’t see past its usefulness for email,” Rin said in a statement online.

5 Things to Know About Crypto Hedge Funds:

  • The average crypto hedge fund has assets under management of $21.9 million.
  • Crypto hedge funds charge an average maintenance fee of 1.72% and a performance fee of 23.5%.
  • Some 44% of crypto hedge funds pursue discretionary strategies, 37% quant and 19% median fundamental with the median fundamental fund returning -53%, discretionary fund -63% and quant fund +8%.
  • These funds tend to be domiciled in the same jurisdictions as traditional hedge funds with the top three jurisdictions for the fund entity being the Cayman Islands (55%), the United States (17%) and the British Virgin Islands (BVI) (13%).
  • Some 64% of crypto hedge fund managers tend to be based in the United States.

Juliette Fairley is an author, lecturer and TV host based in New York.

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In a bid to bridge the gap between institutional investors and the current reach of crypto hedge funds, the Elwood Asset Management firm is developing a new portfolio platform of crypto-based funds for institutional investors.
crypto, hedge, funds
400
2019-58-12
Thursday, 12 September 2019 05:58 PM
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