26 March 2019

Al Mal Capital Perspectives Magazine: Five Questions to Jan Brzezek

Yara Ainsworth

Yara Ainsworth

Head of Marketing and Communications at Crypto Finance AG

About the author

Source: Al Mal Capital Perspectives Magazine, March 2019

Perspectives Magazine: Download the full March 2019 issue as a PDF

Q1: Jan, could you please explain how does Crypto Fund AG differ from the other crypto asset management companies?
Crypto Fund AG is the first, and currently the only, regulated asset manager for crypto assets authorised by FINMA under the Swiss Collective Investment Schemes Act. Presently, no other Swiss
bank or other financial institution exists that offers our level of professional services specialized on crypto asset management. As we offer institutional-level fund products, we do not operate
with self-storage like many other crypto funds. The crypto assets in our funds are stored at a regulated bank in Europe, ensuring professional standards of cryptographic and physical security
as well as regulatory compliance.

Additionally, I am very proud of the highly skilled and professional team we have at Crypto Fund AG. They have impressive experience across various asset management and finance sectors, as well as specialist crypto finance industry knowledge.

Q2: Why should investors be considering adding crypto to their portfolio today?
The long term future potential of the technology is clear. The price points are now lower and at a more acceptable level after the unsustainable rise in prices during late 2017. With the new opportunities in the industry with the institutionalisation, I believe the prices will soon reflect the expected technological breakthroughs. Looking at the five boom-bust cycles over the life of Bitcoin, and observing the recent levelling out of prices, now is a perfect time to join this nascent industry and participate in the next round of success stories.

Q3: What are the best ways to gain exposure to the crypto market?
Investing in a crypto market tracking fund is the easiest and most efficient way for managers to gain exposure to the broad market. They do not have to delve into the fundamentals of each project, nor undergo the extensive learning curve for blockchain technology. The Crypto Market Index 10 is weighted by market capitalisation – this dynamic weighting is ideal as it gives automatic exposure to the next thriving crypto asset as it enters the top 10.

Also, diversification within the crypto industry is important. An index tracking fund is a convenient way for managers to achieve this.

Q4: What are the advantages of investing in the fund tracking the Crypto Market Index 10?
The construction of any crypto index is extremely important for professional investors; other competing products have missed some key factors. Firstly, the Crypto Market Index 10 is independently calculated in real time by the Swiss exchange SIX. Secondly, the eligibility criteria is important with minimum thresholds for market capitalisation and trading volume, and ineligible conditions for indexed, pegged and anonymity-centred crypto assets.

CMI10 Constituents’ weights (as of end of February 2019)

Q5: Do you also intend to offer active investment solutions?
We indeed launched a CTA fund in January 2019. The investment objective of the fund is to maximise returns, regardless of the overall market performance of crypto assets. The actively-managed
approach allows both long and short positions.

The Fund pursues a systematic, quantitative approach based on market prices of crypto assets. The investment strategy is limited to the most liquid crypto assets, which shows the greatest potential according to time series analysis.

The crypto market is an emerging industry with inherent inefficiencies. This brings obvious opportunities to turn these inefficiencies into profitable investment strategies. The market exhibits significant volatility and long trends in either direction. Today, most crypto traders are making decisions with the help of charts.

The market’s lack of automated trading creates clear signals for profitable investment decisions. These factors indicate the strength of an investment strategy that uses a quantitative, market trend-following approach.

Portfolios using automatic, algorithmic systems can considerably outperform the competition. Thanks to the ongoing institutionalisation of the industry, such as the arrival of a regulated crypto futures market, CTA (or managed futures) strategies can now be successfully implemented, with increased possibilities to gain when the market retreats.

This type of strategy can appeal to both blockchain enthusiasts and crypto critics. They gain in value when Bitcoin prices boom, and, during a market downturn, capital is protected at a minimum or even brings positive returns.

Perspectives Magazine: Download the full March 2019 issue as a PDF

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