Even though the recent boom in cryptocurrencies have left many in the financial industry befuddled, some early investors including hedge fund managers are now enjoying quite a fortune.
A Bloomberg report recently revealed, “The nine cryptocurrency hedge funds tracked by Eurekahedge Pte soared 1,167 percent as a group in 2017, according to preliminary figures from the data provider, which doesn’t disclose details such as assets under management or individual returns. While that trailed the 1,403 percent gain in bitcoin, it comfortably trounced the 8 percent return by hedge funds globally.
“The numbers provide an early look at how professional traders are faring in the world’s wildest investment boom. Even as luminaries from Warren Buffett to Ray Dalio warn of a bubble and cryptocurrencies start 2018 with losses, a growing number of wealthy individuals, family offices and institutions are looking for ways to gain exposure”.
The report went on to state:
“Hedge funds offer investors more than just a wager on rising cryptocurrency prices; their strategies also include market making, early-stage equity investing and bitcoin lending. While those bets proved a drag on returns in 2017, they should help cushion funds against losses during market downturns”.
A brand new crypto hedge fund has just launched called the ‘Bitcoin Inc. Hedge Fund’ set up by early stage Bitcoin investors and property millionaires.
However, it has taken a more conservative approach by the fund mandate to invest only 50% into the crypto space spread over crypto mining, trading, ICOs and the top 20 cryptos and crypto tech companies.
The other 50% is being invested into real estate targeting Airbnb luxury homes for holiday rent (8-10% yields plus 5-7% capital gains) and resort developments and casinos to target the lucrative Asian market.
This enables the fund to potentially make the 1000%- plus the returns crypto can provide. However, this is with 50% less risk, not to mention, half the profits are going into real estate.
The hedge fund spokesperson said, “because its investment committee has access to the crypto space, it has been able to secure pre seed rounds of ICO’s, which can make 5-12 times its money over 8 weeks from pre seed rounds to the ICO”.
One such investment has yielded 1250% within 8 weeks and if the ICO increases 10-fold as many have, it can become a staggering 11250% return.
This is why many family offices and funds are deciding they should at least consider directing up to 1% of their portfolio to such funds.
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