Cryptocurrency exchange company Coinbase is set to launch Coinbase Index, a fund that will see investors put their money on four performing digital currencies that will give large returns to a few of its early buyers. The fund belongs to Coinbase Asset Management, a new subsidiary that will serve investors who have yearly salaries worth $200,000 or a net worth of a minimum of a million dollars – with housing not included.
Investors will have access to cryptocurrencies on GDAX – a Coinbase-operated exchange. The exchange will be determined by market capaital and is set to be adjusted once new coins are included in the exchange. The fund will consist of 62 percent bitcoin, 27 percent ethereum, 7 percent bitcoin cash, 4 percent litecoin. The fund will be launched in a few months and investors can now sign up for it.
Prior to the Coinbase Index Fund, a similar fund has long been available in the market. A crypto index fund called Bitwise Asset Management holds ten currencies weighted via market capitalization. Reuben Bramanthan, the product manager of Coinbase, advised Business Insider that its upcoming Index Fund simply reflects the increasing demand for digital coins from high net worth investors. According to Bramanthan, “We are seeing new investors coming to the market because they see an asset that is not correlated and outperforms, but they don’t know which ones to buy.”
There is no date specified yet on when the fund will be launched as well as the investment fund amount it sets to target. What is definite is the 2 percent annual fee the fund will charge. Also, the fund will only list coins on the GDAX. Prices will come from the order book of the GDAX USD.
The creation of the fund is a stark difference from Coinbase’s traditional focus on trade facilitation within the digital currency market. According to its general manager Dan Romero, he intends Coinbase to be the Google of virtual currency.