What is An Index Fund?
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Index funds have always been highly regarded in the world of stocks, with the most infamous billionaire investor Warren Buffett himself winning a $1 million cash bet when he boldly and correctly claimed that no collection of managed hedge funds could ever out perform an index fund.
Index funds are a useful way of gaining a broad exposure to the market. As an active investor, you would try to outperform the index by speculating which product to buy. By comparison, an index fund casts a wider net that invests in many products which averages out the inevitable wins and losses over time. |
It’s virtually impossible to consistently select high performers which is why an index fund is a sensible approach. By participating in an index fund, you as the investor can make a relatively small outlay whilst still benefiting from the full exposure of a mass fund, which can’t be so easily replicated by yourself.
Index funds can present to you the option of a well rounded portfolio.
Similar to the S&P 500 fund which invests across the top Fortune 500 companies, Crypto20 invests across the top 20 cryptocurrencies.
Since the index fund always covers the top positioned performers, there is little need for heavily active research analysts required in active fund management which equates to much lower operational expenses.
Index funds can present to you the option of a well rounded portfolio.
Similar to the S&P 500 fund which invests across the top Fortune 500 companies, Crypto20 invests across the top 20 cryptocurrencies.
Since the index fund always covers the top positioned performers, there is little need for heavily active research analysts required in active fund management which equates to much lower operational expenses.
The concept of buying and holding is a passive investment strategy as these holds can be made for a long period of time, regardless of any price fluctuations in the market.
Since the investor does not want to be concerned with short-term price movements, the buys need to be selective. The crypto world is still rather new and in its volatility, many people are enjoying the benefits from buying low and selling high. With transaction fees this strategy does not necessarily work for small investors. |
However, due to the lack of long established patterns, the buy and hold strategy is not so clear which is why an index fund such as Crypto20 is the closest assimilation that enables this strategy.
The top 20 cryptocurrencies are used in the Crypto20 fund but a weekly rebalancing ensures that the fund is not only kept up to date but that it also has controlled risk liability by limiting overexposure from any one dominant holding within the fund.
The top 20 cryptocurrencies are used in the Crypto20 fund but a weekly rebalancing ensures that the fund is not only kept up to date but that it also has controlled risk liability by limiting overexposure from any one dominant holding within the fund.
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*Please understand that the information on this site does not constitute financial advice in any way.