Coinbase, as one of the original and biggest cryptocurrency exchanges globally, has decided to keep pushing the boundaries of what can happen with cryptocurrency, opening up a passively managed cryptocurrency index fund.
Compared to traditional asset investment funds, this cryptocurrency one offered by the exchange will have a low management fee and no performance fee, a rare difference, but a difference that is becoming part and parcel with cryptocurrency funds of a similar nature.
How it works
The fund will have a $10,000 minimum and charge a two percent annual management fee with no performance fee.
This is the first investment vehicle from Coinbase’s new asset management division. It will include all digital currencies that trade on GDAX, weighted by market cap.
This means at launch it will be comprised of 62 percent Bitcoin, 27 percent Ethereum, seven percent Bitcoin Cash and four percent Litecoin. This will rebalance whenever a new asset is added to GDAX as well as once a year to account for supply changes.
This is only the beginning for Coinbase as they also are not limiting themselves to just what appears near the top of GDAX. According to the exchange, they will offer future investment vehicles that aren’t limited to what is listed on GDAX.
The fund backdated to early 2015 with the launch of GDAX, and, unsurprisingly, its performance has been astronomical as the cryptocurrency market has exploded in such a short space of time. It is up, from then, almost 49x.
Coinbase, as the major leader in exchanges in the US, is only opening this up for US Citizens as it continues to tow the line with regulators.
Investments can be made in US dollars or any of the included digital currencies, as long as an investor can meet the $10,000 minimum investment.
For this fund investors will also have to be accredited and US-based, although Coinbase hopes to remove those restrictions for future funds.