While the Fund is an active trading Fund, longer term value investing will generally follow the process outlined below:
All assets are given a weighted score based on 14 different value criteria determined by Cloudbreak and ranked according to each asset’s 12 month risk-weighted growth forecast. Currencies with the highest attribute score and greatest risk-weighted potential for growth are included in the fund.
Once we have identified our inclusion targets, we follow a three-step process as follows:
Application of Modern Portfolio Theory in order to allocate the optimal mix of small, medium and large cap coins across the portfolio
Access our global liquidity providers to establish positions at the sharpest pricing within the strongest liquidity pools
Monitor and periodically rebalance your portfolio
We consider each asset’s historical price behaviour, risk-return relationship, crypto-market trends, political and policy environment and expected behaviour going forward based on the underlying technology’s value and developer support. We also evaluate each asset on its potential for capital growth and correlation with the other portfolio assets in order to effectively manage risk.
These investments should be considered high risk due to both the volatility of the underlying crypto markets and the uncertainties associated with nascent industries. However, despite their high volatility; or in fact because of it, these assets give investors exposure to potentially astronomical capital gains that simply cannot be matched by traditional asset markets.
An additional point for consideration here is that crypto markets provide a source of healthy diversification for stock-heavy portfolios during economic uncertainty due to their low correlation with equities and safe-haven appeal during economic turbulence.