Would you like to gain exposure to an actively managed bitcoin fund with a solid management team?
By purchasing Class T shares through Crypto Asset Fund (CAF), a fund managed by Crypto Asset Management (CAM), you can gain exposure to an active management strategy that blends long/short, fundamental and algorithmic trading strategies, along with strategies involving lending and initial coin offerings (ICOs).
(Be sure to check out our guides on Class I shares and Class L shares offered by Crypto Asset Management as well!)
Tim Enneking, managing director of CAM, holds all-time annual performance records for both hedge funds (5,556.39 percent) and funds of funds (356.68 percent).
The fund’s overall strategy is complex, so let’s break it down in terms of its different sub strategies.
Primary Strategy
The fund’s primary strategy, which is used for roughly 50 percent of the assets that CAF holds for Class T, involves long/short trading of “blue chip” digital currencies, along with fundamental and algorithmic (algo) trading overlays (secondary strategies “overlaid” on top of the primary ones).
Secondary Strategy
The secondary strategy, which is used for roughly 30 percent of Class T’s assets under management (AUM), involves long/short algo trading and a fundamental overlay.
CAF uses a research strategy which involves small-to-mid-cap digital currencies and ICOs for its tertiary strategy, which is harnessed for approximately 10 percent of CAF’s AUM.
Investors should keep in mind that CAF will not use the assets gathered for Class T shares to trade “penny” digital currencies – meaning altcoins worth less than $2 million – or “dead” currencies, defined as those that have very little trading volume.
Trading Layers
The fund has three trading layers, which are basically the lengths for which CAF holds a position:
- Core hold
- Core leverage
- Trading leverage
Core hold is a longer-term, unleveraged position. Usually, the fund uses this approach, which is mainly for blue chips and large caps, for its Class T shares.
Core leverage means taking out longer-term leverage, generally for a long position. The fund uses this approach less frequently. Enneking notes that “it often doesn’t exist at all.”
Trading leverage, the third layer, represents positions that CAF enters – and exits – much more quickly.
One example of how this could be used is the following scenario:
The core hold and core leverage are long positions, but trading leverage is short.
Considerations
The fund has monthly liquidity, meaning that investors have one opportunity per month to either buy its shares or sell them. However, at the time of report, Enneking stated that hopefully, Class I shares would have weekly liquidity soon, helping to diminish this problem.
Further, Class T shares are only open to accredited investors in the United States. The manager has created an offshore feeder fund for non-US investors.
Summing It Up
If you are interested in gaining exposure to an actively managed bitcoin fund that leverages a sophisticated investment strategy, CAF’s Class T shares may be a good fit.
However, keep in mind that as an investor, you need to conduct your due diligence before leveraging any investment strategy. This includes looking at its inherent risks, the risks that characterize the market, and any alternative strategies you could use. As is always the case, never invest more than you can afford to lose.
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