A new fund-of-funds announced this week is aiming to raise up to $one hundred million through an initial coin offering (ICO).
Referred to as the Apex Token Fund, the key notion is that tokenization provides purchasers a way to money out their investment early on, without diminishing the underlying principle.
Speaking exclusively to CoinDesk in a phone call, Joseph Bradley, a fund co-founder, mentioned:
“The whole thought of applying a blockchain to this sort of structure is it unlocks liquidity among the vintage and harvest date of raising the fund.”
Under the scheme, each token will represent a proportional piece of equity in the fund. Once the tokens are distributed to investors, they can start off trading these tokens on exchanges. If 1 of the underlying funds spikes or drops in value and an investor wants to exit their position, they can do so without the need to have to follow the lockup guidelines standard at traditional hedge funds.
The fund tentatively plans to run a presale of the token – also called Apex – sometime in January, with a public sale in February. The fund will launch if a minimum of $25 million is raised, and has a difficult cap of $100 million.
Apex Token Fund representatives declined to disclose which funds it has secured access to so far.
Domiciled in the British Virgin Isles, U.S. investors will be excluded from holding Apex. There are far more than 120 crypto hedge funds out there at this point, according to CNBC, such as several funds-of-funds.
In reality, Bradley and Chris Keshian (one more co-founder) also constructed Neural Capital, another crypto fund that launched in December 2016. They set up the new fund soon after realizing that numerous mainstream crypto investors have been excluded from the very best performing hedge funds, limiting access to higher-net-worth men and women.
“The notion behind this democratization of access is to let your typical crypto holders to achieve exposure to these fund returns by means of these tokenized approaches … We also saw this space where a lot of people are investing in ICOs. They aren’t necessarily investing since they think in the technology. They are investing for these non-linear returns.”
Although the returns can be massive, crypto investors know the value volatility can be stomach-turning.
“You can smooth out volatility by obtaining a diversified investment strategy in diverse investment strategies,” Keshian said.
To this end, Apex will supply a balance of funds focused on cost arbitrage, protocol focus, sentiment evaluation and other approaches.
The 1st Apex Token Fund will eventually sunset, divesting from all of the underlying funds, at which point token holders will then be able to redeem their tokens for a proportional quantity of fiat currency. As tokens are redeemed, they will be destroyed till the fund is wound down completely.
By then, other Apex funds are planned to have launched.
“We program to do this in a quantity of capacities,” Keshian stated. The fund model will remain crypto-focused early on, but could take on other verticals later, he indicated.
Rather than take out fees more than the life of the fund, the Apex team will allocate 15 % of the total pool of tokens as its management fee.
Bradley stated, “What we’re truly attempting to do is lock that percentage in upfront and push as a lot worth back to the token holders as we can.”
Bubbles image through Shutterstock
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Disclaimer: This article should not be taken as, and is not intended to supply, investment suggestions. Please conduct your own thorough research before investing in any cryptocurrency.
Published at Wed, 29 Nov 2017 17:00:24 +0000