Over the past year, a lot of crypto funds have emerged. Many of them are not so great, but others are executing sound strategies in the space. But why are so many not able to execute? With various hedge funds, the minimum requirements are quite steep and the lock-up periods are quite substantial. Hedge funds typically need time to execute their strategies, which means investor funds are frozen for a significant period of time.
However, within a token framework, these issues could be solved through a standard fund of funds (FOF), an investment strategy that holds a portfolio of other investment funds rather than invest directly in the underlying assets.
How Does It Work?
The APEX Fund is tokenized through ownership of the APEX token, an ERC20 token on the Ethereum blockchain. Tokenizing the Fund provides investors access to investment options, which previously required significant capital commitments. In turn, this allows investors to avoid the aforementioned lock-up period and immediately makes funds available for transfer or distribution, with the expectation that investments will be liquidated on a date that is best for the investor.
By holding APEX, the investor retains an indirect ownership of the master fund.
The Currency Explained
For all intents and purposes, it’s a security token, and thus is subject to local securities laws. APEX comes with some unique characteristics; eliminating the need for high minimum requirements, it attempts to lower the investment amount. Additionally, the funds are freely tradable as an ERC20 token, providing investors with immediate liquidity. “You’re investing in the master fund, rather than capital locked up for up to two years,” said the CEO, Chris Keshian. APEX seems to satisfy the investor’s desire for liquidity.
Save Time Monitoring Your Investment
“It’s a compelling case for someone who wants exposure to the asset class, but doesn’t want to do it full time,” said Keshian. Specifically, APEX allows an individual to purchase 1 ERC20 token, which allows the individual’s capital to be managed by the top-performing crypto hedge funds. These are companies that have been in the space for some time with a great track record, monitoring the space 24/7. “The difference is that each fund executes a different strategy, decreasing the overall risk across the board,” said the CEO.
With a traditional fund investment, the investor can hold a token and avoid paying yearly tax in the event that prices increase. By holding APEX, an investor is only subject to the capital gains tax.
What Does The Future Hold?
This is a developing area of fintech and the law.
“Just because it’s new and developing doesn’t mean we shouldn’t explore it; it just means we have to be super careful when we do,” said Keshian.
At the end of the day, the cryptospace is becoming increasingly complex, with new projects emerging and new updates to various protocols, requiring 24/7 surveillance of the market. It’s important to do your due diligence before investing.