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Elwood Asset Management, a UK-based asset management firm owned by hedge-fund billionaire Alan Howard, is reportedly planning a $1 billion venture in the cryptocurrency hedge fund space.
This was revealed by Elwood chief executive officer Bin Ren to the Financial Times. Ren said that the firm was working on a platform that would design portfolios of cryptocurrency funds, particularly for institutional investors.
The new platform will reportedly seek to address the volatility and security risks often associated with the crypto hedge funds. Ren said that the objective is to offer investors a select group of crypto funds with robust operations so that they can avoid “blow-ups.”
“Losing traditional assets in the real world is hard. In the digital world, it’s very easy to lose assets — put in the wrong address for a bitcoin transfer and it’s gone forever,” he said.
Ren revealed that Elwood has already begun screening crypto hedge funds, identifying up to 50 that “probably satisfy our due diligence”.
The platform being designed by Elwood would reportedly allow investors to specify their terms such as the risk they are willing to take, the returns they expect, and their liquidity terms. At the same time, it will also measure the potential correlation with other assets owned by the investors. On the basis of these terms, it will design portfolios for each investor.
However, the details of the new fund have not been finalized yet.
Investors would have to pay a certain fee to Elwood for using the new platform, on top of the fees they need to pay to access the underlying funds.
“I see this as a very big growth opportunity,” Ren said, adding that the new platform-style product could ultimately manage over $1 billion of assets.
Earlier this year, Invesco, in collaboration with Elwood, launched a blockchain exchange-traded fund (ETF) on the London Stock Exchange.
Last month, Invesco Japan launched the Japanese domestic ‘Invesco Global Blockchain Equity Fund’, offering Japanese investors exposure to digital assets and blockchain technology. The fund will track the performance of the Elwood Blockchain Global Equity Index.
Previous reports have also suggested that Elwood was planning to launch a range of cryptocurrency products targeting institutional investors.
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