Portfolio Rebalance: May 2018
NOTE: Disclaimer below
In May 2018, we have increased the number of assets in the AAAX portfolio to 48. Our targeted assets in the portfolio for the next 3 years is between 45–50 assets. This decision is based on our analysis of previous technological bubbles witnessed on the planet over the past 400 years. We believe this strategy will provide sufficient diversification to mitigate risk through the development phase of the Blockchain technology.
As we have set out in our strategy on our website and ICONOMI platform, we allocate greater capital in the portfolio to projects with: (1) higher market capitalisation projects, (2) higher priority for the practical needs of products and services by the user in the Blockchain environment, and (3) closer distance to market acceptance shown by number of users or income production and/or a number of other indicators depending on the project use case.
The latest assets included in the AAAX portfolio are:
- Stellar Lumens (3%)
- Litecoin (3%)
- NEO (3%)
- Binance (2%)
- Cofound.it (1%)
- Aelf (1%)
- Enigma (1%)
- CyberMiles (0.5%)
These positions came mainly from the reduction of exposure to Dash (-2%), Bitcoin (-5%) and Ethereum (-1.5%).
The inclusion of Stellar, Litecoin and NEO was mainly due to market cap weightings. These are extremely important projects in the Blockchain space and should not be ignored. Yes, they have strong competitors and each face challenges, but these are not dissimilar from many of their peers. We are clear on the fact that calling the winner at this stage is far too early in the development cycle. Each of these projects have enticing growth potential, interesting varying approaches to the scalability challenges and intelligent management teams driving the projects.
Binance coin comes in for obvious reasons. Hitting the top 3 exchanges (no.1 as I write this) from a volume perspective makes it a complete no-brainer. Its ability to move jurisdictions and continue to offer service levels to its clients while maintaining volumes makes it a highly resilient animal in the blockchain environment. Its ability to stay abreast of the EOS blockchain launch is a good example of its offerings. Binance has asserted itself as a must in any crypto portfolio on the planet.
Cofound.it is now reaching an interesting stage of its lifecycle as the blockchain gathers greater momentum. As interest from larger institutions on the planet increases, this project is well placed to benefit from providing highly necessary service to new market entrants. It is also priced attractively giving it a more asymmetric risk/return profile.
Aelf, Enigma and CyberMiles are three projects we have had our eyes on for quite some time. We are excited to introduce them into the portfolio.
In our view, miles or loyalty awards are significant use case of the Blockchain technology. CyberMiles has reached an attractive scale. We like that the software is user agnostic and effectively a plug and play for its clients that will essentially makes all loyalty points interchangeable.
Aelf team makes for very interesting reading (massive intelligence bank right there, not to mention some big hitters backing them) and to be honest, I just like supporting projects that are aimed at the betterment of the Blockchain ecosystem as a whole. I believe, as asset allocators in the ecosystem, we need to be supporting these types of projects that support cross chain communication. There is no doubt we need to become blockchain agnostic so that value can flow more easily across all projects that support user and real-world integration. The aelf project is making the Blockchain easily adaptable for businesses.
On the back of Aelf bringing us cross-chain solutions and communication — we need privacy technology that is scalable … step in: Enigma. While there is some overlap between aelf and Enigma we think 2% allocated to cross-chain solutions is very much needed in our portfolio. Enigma’s privacy algorithms turn “smart contracts” into “secret contracts” which inevitably makes the ecosystem more decentralised.
We also increased position sizes in the following:
- Waves (Up to 3% from 2.5%)
- Status (Up to 3% from 2%)
Both these projects’ progress to market with real world applications have been accelerating recently and we want to take advantage of what this could mean for the value of the coin. Furthermore, this strategy plays into the Asymmetry way of thinking. As projects we like get closer to delivering ecosystem changing applications and therefore generating income, so we increase our exposure to these projects.
If you would like to continue this discussion please join us in Telegram (details below).
Best,
Kenny
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Disclaimer: Any content published by Asymmetry Asset Management or its affiliates is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information.
