21Shares altcoin basket ETF
Swiss crypto ETF specialist 21Shares has launched another crypto basket fund, this time targeting small and medium cryptocurrencies.
The 21Shares Crypto Mid-Market Index ETP (ALTS) will track the Vinter 21Shares Crypto Mid-Cap index. The index measures the eight largest cryptocurrencies, excluding bitcoin and Ethereum.
It includes: binance coin, solana, cardano, ripple, polkadot, litecoin, polygon, and bitcoin cash.
The launch closely follows a similar move by WisdomTree, which launched the WisdomTree Crypto Altcoins ETF (WALT) two weeks back at a lower 1.49% fee. The major difference between WALT and ALTS is that 21Shares fund tracks a broader basket of eight coins, compared with the five in WALT. (Table below).
The funds are potentially designed for investors who already own bitcoin and Ethereum. And are looking to avoid betting on specific smaller coins.
21Shares provides the largest crypto basket ETF, the 21Shares Crypto Basket Index ETP (HODL), which currently houses $194M in assets.
ALTS charges 2.5%.
|
WALT |
ALTS |
||
|
Solana |
44% |
Binance Coin |
31% |
|
Cardano |
27% |
Solana |
17% |
|
Polkadot |
14% |
Cardano |
16% |
|
Litecoin |
10% |
XRP |
14% |
|
Bitcoin Cash |
5% |
Polkadot |
10% |
|
Litecoin |
4% |
||
|
Polygon |
3% |
||
|
Bitcoin Cash |
3% |
||
Bernie’s commentary – the index approach
People tend to focus so much on specific cryptocurrencies that they can forget that there is an index approach available. Those not wishing to pick winners can just buy the market, as with Vanguard’s stock market index funds.
Judging by AUM data from Europe’s crypto ETF providers, the index approach is far less popular with investors than picking specific cryptos. Crypto investors want to take a punt. I wonder why. As presumably the same mathematics (weighted average) applies to trading cryptos to try and beat the index as it does to trading stocks to try and beat the index. So why the preference?
One guess – and I’m just guessing – might be that speculation is a big part of crypto. And that an index approach doesn’t whet the appetite as much.
Another guess would be volatility. A benefit of diversification and indexing in the share market is you get less volatility. Sure—you can get less volatility diversifying crypto as well. But the asset class as a whole is just so volatile that for many it might be a moot point.
A final guess is that the market is just less mature. To my knowledge, there is no published study on whether actively trading crypto can outperform the market (I.e. no crypto equivalent to SPIVA). And until evidence comes along suggesting they should do otherwise, investors may simply prefer to trust their gut and punt.
This is all conjecture. I’m a big fan of crypto index funds. I just find that from where I am in London it’s hard to buy these crypto ETFs. Brokers (FSA) don’t let me trade them.