Exchange-traded funds are the most convenient way for investors to invest in the broad market. Exchange-traded funds are funds whose shares are traded on stock exchanges. This type of funds differs from mutual investment funds in part that shares of exchange-traded funds can undergo all transactions on the stock exchange that are available for regular shares. In fact, exchange-traded funds are a new type of securities, which are certificates for stocks, bonds and commodities.
Over the past twenty years, exchange-traded funds have become one of the most popular tools for both institutional and private investors. The volume of exchange-traded funds worldwide amounts to $4.5 trillion. Over the past 13 years, mutual funds globally increased by 150%, and exchange-traded funds — by 1,000%. Despite this fact, exchange-traded funds still have a huge growth potential because they constitute only one-tenth of the world’s mutual funds.
The growing popularity of the blockchain technology in recent years has resulted in an increasing number of investors who recognize the tremendous potential of such a technology and, subsequently, the cryptocurrencies themselves.
The main factors that attract players to the industry is an extremely low or even negative correlation of the classic digital asset market with the classic financial instruments, their almost total independence from the fiscal policies of various states and limited issuance.
The technology is just starting to become part of people’s daily lives and is developing every day. This means that the future value of investments will only grow due to the improved blockchain-based solutions, increased popularity of solutions in the real sectors of the economy, as well as due to the forming of the comprehensive and loyal approach of regulatory authorities in different jurisdictions.
Investing in cryptocurrencies alone and without any tools is rather difficult. The Zichain’s TheIndex.Fund gives you the choice of investment strategies by dividing the market into five simple and user-friendly indexes that meet common investment models and strategies.
Advantages of the Zichain exchange-traded fund solution
The Zichain created a solution for working with such funds as part of a unique and functional infrastructure. TheIndex.Fund includes automated cryptocurrency indices that provide investors with convenient, user-friendly access to the type of digital assets that continues to demonstrate predictable and consistent growth.
Working with TheIndex.Fund offers investors a unique opportunity to buy just one token that will replace an entire diversified investment portfolio and will create a single point of entry to the cryptocurrency market.
The order execution procedure is streamlined and optimized in detail, which allows the service to charge very low fees. Asset storage is another strong advantage of the service, which is achieved through the highest degree of cybersecurity and custodial activities.
When working with the service, investors immediately get access to a multitude of customized funds — from standard indices of the first tier to more narrow niche industry indices.
Types of index strategies on TheIndex.Fund
The Zichain ecosystem has a ton of solutions for investors in the cryptocurrency industry. TheIndex.Fund is a solution designed for effective work with exchange-traded funds.
The index funds are based on five indices developed by Zichain, which allow investors to flexibly select and customize their investment strategy. Investors can regulate the level of risk and profitability, the level of portfolio diversification, as well as the level of involvement in various types of projects.
Blue Coins Index
This index is the first tier of cryptocurrency investments and is the epitome of reliability and predictability. The index includes five cryptocurrencies that rank among the first in total capitalization — currently, they are Bitcoin, Ethereum, Ripple, Bitcoin Cash and EOS. Index yield directly depends on the development of the entire cryptocurrency industry, because it includes the currencies that at the moment collectively make up 80% of the total market capitalization.
Second-Tier Index
The second tier is a type of a much more aggressive investing that takes into account market growth. The rate is more aggressive and more risky, because the index includes cryptocurrencies with a smaller capitalization than that of Blue Coins.
The index includes cryptocurrencies with unique and promising features, development and market adoption of which could entail high investment growth. The index includes twenty cryptocurrencies with the largest market capitalization, apart from the first five, which are included in the Blue Coins index.
Currencies Index
Currencies Index is a strategy based on cryptocurrencies that position themselves as a real alternative to traditional fiat currency. The index is suitable for investors who view cryptocurrencies primarily as not the source of making a lot of money fast, but rather as a real step toward replacing the classic payment systems with a digital counterpart.
The index includes cryptocurrencies ranking among the first 50 in terms of the volume of market capitalization which are considered a means of payment. All currencies of the index are coins that provide for a decentralized system of payment processing. The index reflects the state of the market through the prism of the currencies corresponding to the original spirit of free Internet.
Services Index
This index includes only those cryptocurrencies among the first fifty in terms of market capitalization, which are based on the actual development of products designed for a real or digital economy sector, as well as for many types of services, including credit financing, insurance, storage and processing of information based on the blockchain technology, cloud computing, and so on.
Platforms Index
Platforms Index includes cryptocurrencies ranking among the first fifty in terms of capitalization, which are an important part of different infrastructures. The index includes cryptocurrencies that support various ecosystems and platforms — decentralized storage of personal data, crowdfunding, management of assets and investments, mobile applications and web-based systems, and others.
Indices are calculated in USD and are updated every day, and cryptocurrencies that they account for should be traded on exchanges for more than three months. The weight of each individual cryptocurrency in the Blue Coins and the Second Tier indices is not restricted, and in the other three indices — it cannot exceed 25% at the time of the monthly rebalancing.
All indices are based on a single calculation formula that takes into account the sound analysis of the currencies in terms of market capitalization and weight restricting coefficient. The index value is itemized, and they are calculated to two decimal places, similar to market capitalization. Index rebalancing takes place every first day of the month during the first fifteen minutes after midnight.
Diversity of the indices and convenient functionality of the service ensure that the process of investing in cryptocurrencies is user-friendly and its results — profitable. Every investor can fine-tune the strategy and receive the rate of return that depends on the risks they are ready to take.
