For those who are fans of the Billions series know what hedge funds are. Like Axe Capital, hedge funds are quite popular for risk-averse investors. Year by year, they seek to overcome the market with different strategies. And with the appreciation of digital assets and an ever-increasing confidence, managers have begun to add crypto to their hedge funds.
A survey made by PanoramaCrypto identified about 300 active crypto hedge funds with some shares in cryptocurrencies. And the number of fund administrators who have been adding crypto to their traditional portfolios is growing.
What is a Crypto Hedge Fund?
A hedge fund is a different way for a person to invest in a large group of underlying assets. They are managed by specialized investors, occasionally rebalanced and analyzed infinitely. Investors receive profits from the market maneuvers of these specialists.
Currently, there are two types of crypto hedge funds. Those who manage wallets containing exclusively cryptocurrencies and those who have added some cryptocurrency to a mix of assets.
The first type of hedge fund seeks to maximize returns by adding newly-offered currencies to the portfolio. These are more risky. The former are more risk-averse, but are less profitable.
An example of a crypto hedge fund is the Crypto CopyFund, available on the eToro Cryptofund platform. This fund offers investors the ability to replicate in the wallet the movements of the bitcoin market and other established currencies, such as ether, ripple and dash.
Small but growing percentage
The bitcoin remains a small percentage of the hedge fund industry. But even the oldest and most established funds are predicting growth. Millenial generation prefers to retain its resources in a cryptocurrency fund instead of banks. For this reason, traditional hedge funds have been considering digital assets.
In addition to hedge funds, there are the index funds, which can also be called ETFs. They also replicate the movement of selected assets. And they usually have lower administration rates. And they’re also a safer way for investors to enter this market.