Are you looking to get involved in digital currencies without incurring significant risk?
If so, one way of achieving this objective is to invest in Class L interests issued by Crypto Asset Fund (CAF), a fund managed by Crypto Asset Management (CAM).
(Be sure to check out our guides on Class T shares and Class I shares offered by Crypto Asset Management as well!)
Class L Basics
The basic purpose of these interests, or shares, is to generate compelling returns by lending investor funds out to participants in the digital currency markets. Basically, if you invest in Class L interests, you will receive returns on capital lent out to other investors.
Tim Enneking, managing director of CAM, notes:
“L Class allows investors to ‘play’ in the crypto ‘sandbox,’ without all of the volatility and uncertainty. The class can only increase in value. The level of the increase depends on interest rates. The amounts invested will only bear interest from lending which is 100 percent secured. How can it go down?”
What Makes L Shares Different
So what makes buying these interests different from lending your money through an exchange such as Bitfinex? Enneking points out two key differences:
1) Custom Algorithm. The fund uses a custom algorithm that is designed to help investors generate strong returns. Enneking explains:
“We have written an algorithm that will automatically relend the assets (USD, BTC, ETH, whatever) at the best rate (actually, just under it to make sure it get put to work immediately). If not, and if a lender has selected ‘relend’ on any platform, your assets will be offered for borrowing at the prior rate at which they were lent out – which may then be too high to attract attention or may be far under the current market rate.”
2) Leveraging Multiple Exchanges. CAF invests in many different platforms, each of which comes with its own sets of rules, as well as advantages and disadvantages. These exchanges are constantly adding (and removing) functionality and changing how they work.
Further, CAF scours both exchanges and currencies to find the best possible rates at all times. Enneking’s firm works 24 hours a day, something that is not practical for individual investors. Finally, Enneking stated that at the time of this report that his company was in the process of negotiating “bulk” agreements with two exchanges to lend with them (as opposed to peer-to-peer) which will ensure an even better flow of returns.
Summing It Up
Class L interests can provide significant upside for investors without requiring them to incur significant risk. By purchasing these shares, you may benefit from the interest payments that come from lending out your funds.
CAF has taken several steps to make these interests preferable to lending money out through an exchange, including using a custom algorithm, working with multiple exchanges and monitoring the global markets 24 hours a day.
While this may all sound quite positive, keep in mind that risk is inherent to investment. Before making any investment decisions, be sure to conduct thorough due diligence and investigate the potential risks.
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