ITI Funds, the multi-product financial asset management platform, has launched the ITI Funds Crypto Index Fund (ticker: ITIFC), the world’s first index fund with professional custody and insurance. The fund tracks a basket of top crypto-assets but using a traditional index-tracking style set up, the company said in a press release on March 7.
The fund is domiciled in Luxembourg and offers professional investors an easy-to-access platform to tap into the new and rapidly growing asset class via the conventional purchases of fund units. ITI Funds believes the main advantage is a legal compliant transparent infrastructure.
“This jurisdiction has been chosen due to its well-established legal regulation, asset-custodianship and investor convenience. The fund’s structure facilitates total transparency and legal compliance, and its operation is supported by leading service providers in Luxembourg as well as widely known US market professionals,” says Marat Krimskiy, the manager of the project.
The fund is based on ITI Funds fund platform in Luxembourg that have dramatically dropped the barriers to entry for would-be fund managers, as described by ITI Funds CEO Gelb Yakovlev in a recent interview with bne IntelliNews. Luxembourg is home to the world’s second-largest volume of fund assets under management, worth $4bn.
The ITI Funds Crypto Index Fund tracks an index called ITI Funds Crypto Index which is made up from a basket of the 30-biggest cryptocurrencies with the largest market capitalizations including: Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, ZCash, Stellar, and Ethereum Classic. The top-30 list is regularly updated based on changes in liquidity and trading volumes, as well as the availability of safe custody.
“We are excited to launch this index with ITI Funds,” said Thomas Kettner, Managing Director at MV Index Solutions (MVIS), which partnered with ITI Funds in the launch. “Starting with nine digital assets, the index is a dynamic instrument which covers the broader market while at the same time staying within the safest and most recognized names of this new asset class.”
The fund works on principles similar to those of common ETFs (Exchange Traded Funds). The idea of the fund is based on the received wisdom that following a market, or tracking an index, is often more profitable in the long-run than active asset management. However, the idea of an index tracking-style fund in the world of cryptocurrency is still unusual.
The fund’s portfolio is comprised of well-known crypto assets that are eligible for professional custody with the requisite insurance. The fund’s assets are secured by a licensed institutional custodian with Lloyds syndicate insurance, which is also unusual for a fund.
The diversity of cryptocurrencies is designed to smooth out the volatility and the maximum weight of any single cryptocurrency in the index is capped at 15%.
Since its inception IFCIF has grown more than 3,100% since the beginning of 2017, compared to Bitcoin’s 600% growth.
“We believe that the next step in the cryptocurrency market evolution will be an institutional investment inflow and that such inflow will only be possible with the new investment products with legally compliant infrastructure that is both transparent and familiar to institutional investors. As such, we have established the ITI Funds Crypto Platform infrastructure starting with the Index Fund. The platform’s principles are similar to those of the general fiat world. If you expect the crypto space to continue its bullish trend, then now may be the right time to invest” Krimskiy said.