Best Crypto Fund Option in the UK 2024
Unless you’ve been hiding under a rock in 2024, it's hard to overlook the fact that cryptocurrencies are becoming an increasingly appealing asset class for institutional and individual investors to invest in, and more and more people are starting to allocate a portion of their portfolio to crypto funds and ETFs in order to take full advantage of the many passive income opportunities.
But 2024 hasn't been all smooth sailing for cryptocurrencies, and market trends have recently experienced a steady downturn. As a result, there are also investors who are feeling hesitant and uncertain about getting too exposed to the volatility found within crypto. Yet, it is important to realise that amidst this bearish phase lies an opportunity for those who know where to find it, and crypto funds provide an excellent solution for the lack of time and expertise amongst investors who have the capital to diversify into this exciting asset class.
This guide will therefore seek to provide investors with an insightful look into crypto funds, their pros and cons, the best crypto fund option for UK investors in 2024, and ultimately, a recommendation of how crypto indexing and strategy providers are the best choice for new investors looking for proven and steady results.
What is a Crypto Fund
Put simply, a crypto fund can be seen as an expert intermediary that receives and pools investor capital in order to strategically invest into various cryptocurrencies on their behalf - all for the purpose of generating consistent returns.
These funds provide investors with an opportunity to be part of the crypto market without the hassle of purchasing, storing, or handling the assets themselves, and this is especially advantageous for individuals who are not familiar with the complexities of the crypto world; or who simply do not have the time to manage their own portfolios.
However, it is important to understand that crypto funds can vary in their structure and approach, and each fund has its own specific investment strategy, level of risk, user experience, and potential returns.
Crypto ETFs (Exchange-Traded Funds)
A crypto ETF is an investment fund that mirrors the price movements of one or more cryptocurrencies. It is traded on traditional stock exchanges, allowing investors from various backgrounds to participate.
A crypto ETF functions similarly to traditional ETFs by representing a collection of cryptocurrencies as underlying assets, and investors have the ability to purchase and trade shares of the ETF on stock exchanges, much like they would with any other stock.
While ETFs have proven to generate yield for certain investors, there are barriers that may hinder new investors. These include the complexity of ETFs (which can make them difficult to track), and their accessibility, as they require individuals to sign up for a brokerage account in order to purchase them
Crypto Hedge Funds
Crypto hedge funds are actively managed funds, and have the objective of achieving impressive returns (regardless of the risk) by utilising a range of different strategies.
Crypto hedge funds employ various strategies to potentially maximise returns, and this may include taking advantage of arbitrage opportunities, betting against specific assets, utilising leverage, or using DeFi (Decentralised Finance) yield mechanisms. Typically, these funds cater mainly to affluent individuals and institutions, and have a specific emphasis on Bitcoin and Ethereum.
However, in terms of being suited for new crypto investors looking to gain passive returns, crypto hedge funds often have high minimum investment requirements, making them inaccessible to the average retail investor. Moreover, these funds can often have high fees (management and profit), lack transparency, have rigid lock-up periods, and at times lack the same level of regulatory oversight compared to other investment vehicles.
Crypto Asset Management Firms
Crypto asset management funds are usually made up of professionals who manage a diverse portfolio of cryptocurrencies on behalf of investors, and who tend to come from more traditional backgrounds. Investors can invest their money into these funds, and the fund managers will make decisions on which cryptocurrencies to buy or sell in order to achieve optimal returns.
Unlike crypto hedge funds, the goal of asset managers is to take a more conservative approach to investing, and maximise returns while simultaneously minimising risks.
With regards to their suitability for new investors, asset management firms may not be the best choice for several reasons. For one, these firms often charge high management and performance fees, which can eat into potential returns, and they typically require a significant minimum investment; making them inaccessible to the average retail investor. There's also a lack of transparency and liquidity to consider, whilst some asset management firms may have a limited understanding of the crypto landscape and its various opportunities.
Crypto Index Fund
A crypto index fund is a type of investment vehicle that aims to replicate the performance of a specific cryptocurrency index; in other words, a group or basket of digital assets. These funds can be created on digital platforms, allowing individuals to invest in a range of different cryptocurrencies.
When you invest in a crypto index fund, you are essentially purchasing a small portion of each cryptocurrency included in the index. This allows for broad exposure to the overall cryptocurrency market, and follows a passive investment strategy.
Contrary to the other funds, crypto indexing platforms are actually ideal for retail and new investors, as anyone can easily join and have access to a tailored cryptocurrency index, the fees on profits tend to be much lower, and indexes allow for much more transparency. Furthermore, an index allows for constant market exposure which can sometimes minimise the impact when certain assets perform poorly, and liquidity tends to be strong; allowing for withdrawals within a few hours or days.
Crypto Strategy Platforms
Last but not least are crypto strategy platforms.
A type of index fund, but with easier access and navigation, crypto strategies are a type of investment fund that provide easier access for investors interested in specific sectors within the cryptocurrency world, such as DeFi or NFTs (Non-Fungible Tokens).
Crypto strategies offer a curated experience and user-friendly platform that allow investors to choose strategies aligned with their investment goals. They are similar to index funds, but with a more focused approach, and have the benefit of being integrated with the top exchanges so users can enjoy excellent liquidity, and the best prices available.
Why Choose a Crypto Fund?
Now that the various types of funds have been established, the question that must now be asked is why choose a crypto fund?
Below are a few advantages that can be seen when investing into a crypto fund:
Advantages of Investing in a Crypto Fund
Diversification and Risk Management: Investing in a crypto fund offers an immediate advantage of diversification. Rather than investing all your capital in one or two cryptocurrencies, funds distribute the investment across multiple assets, thereby reducing the risk linked to the volatility of individual coins.
Expert Management: Crypto funds are overseen by professionals with extensive knowledge of market dynamics, trends, and technical analysis. This expertise is especially valuable for individuals who may lack the time or expertise to navigate the intricate crypto markets.
Liquidity: Investment funds in the crypto market, particularly index funds and strategy platforms, provide improved liquidity compared to individual tokens or coins. This enables investors to conveniently convert their investments into cash whenever necessary.
Cost-Effective: New investors may encounter high transaction fees when purchasing individual cryptocurrencies. However, crypto funds typically offer a more structured fee system that can be more cost-effective over time.
Do the Upsides Outweigh the Risks?
Although investing in crypto funds comes with risks, such as market volatility, management errors, and regulatory changes, there are established strategies and protocols in place to maximise the benefits while mitigating potential drawbacks.
Effective Investment Strategies: Numerous crypto funds, particularly index funds, employ proven investment strategies that have consistently yielded reliable returns over time.
Performance: Research has consistently shown that index funds tend to outperform actively managed funds in the long run. The main reasons attributed to this are their inherent diversification and lower fees compared to active funds.
`A diverse portfolio is important for investors who want to minimise risks. Index funds offer a wide market exposure, making them a safer option.
Importance of Choosing the Right Fund
An important step for minimising risks and increasing the likelihood of returns, is knowing the steps to take in order to find the best funds for your needs.
Steps to take that can help narrow down your options include:
Risk Assessment: Understanding your risk tolerance and investment goals will guide you in selecting the right fund. There are many excellent online resources that can help educate you on this, and these are easily accessible via video or article format.
Research: Once you have a solid understanding of your risk tolerance and investment, it's essential to research and compare different funds, their strategies, fee structures, and past performance. Moreover, it's always helpful to contact their team to see if they are up jumping on a call to take your questions.
Reputation: Only go with funds that are managed by reputable firms, or platforms with a track record of transparency and consistent returns. Again, this will require a certain level of independent research, but reputation can also be gauged by analysing their partners and past performance.
Do the Top Asset Management Firms in the UK Cater For Crypto?
A common destination that many new investors have tended to gravitate towards are traditional asset management firms, who although primarily specialise in other asset classes, have slowly begun to look at crypto as a potential asset to cater for.
The reason for them being a go-to destination is simple - many new entrants, besides often having a limited understanding of the crypto space, are also susceptible to mainstream marketing, which is something traditional asset management firms have had a monopoly over for years. Therefore, many people's first port of call are these firms. But are they actually ideal for one's crypto needs?
Below are a list of the top UK Asset Management firms by assets under management (AUM):
Overview
Legal & General: a British multinational financial services company with a strong track record of consistent growth, and with AUM worth £1.19 trillion as of 2022.
Insight and Investments: a global asset management company, responsible for £629 billion AUM as of today.
Schroders: a British multinational asset management company with £726 billion AUM as of 2024.
Prudential plc: an international financial services group with operations in Asia, the US, and Africa, with around £130 billion AUM.
Abrdn (formerly Standard Life Aberdeen): a British investment company that was formed in 2017 by the merger of Standard Life and Aberdeen Asset Management. As of December 2022, Abrdn has £376 billion AUM.
As of August 2024, the top asset management firms in the UK still lag behind when it comes to the provision of crypto funds for clients, and even though there have been instances of some crypto interest and participation (including Schroders taking a minority stake in Forteus, and Abrdn taking a majority stake in Archax), there's currently no top asset management firm that offers crypto asset management.
But not to worry.
While the top firms don't currently offer crypto fund services, asset management providers are also not the most ideal solution for new investors anyway, as they simply don't offer accessible funding thresholds; nor have the same level as expertise as other providers.
This then begs the question - if asset management firms are not ideal fund options for UK investors, then what is?
The Best Crypto Funds For UK Investors
Given how crypto ETFs, hedge funds and the top asset management firms don't appear to be the most ideal crypto investment vehicles for regular UK investors, this naturally limits the choices available to them. The good news is that crypto index funds and strategy platforms are not only easily accessible and user-friendly, but superior financial instruments which often perform better than actively managed crypto funds over the long-term.
One highly recommended long-term choice is the Blockchain Index Strategy that can be found on ICONOMI, which is an FCA-regulated crypto portfolio and copy-trading platform that allows anyone from beginners or experts to seamlessly invest their hard earned fiat currency into an array of different Crypto Strategies; amongst other things.
What makes these Strategies so appealing, is that besides the expertise and experience of their creators, they are propped up by an array of powerful features, including buy/sell price optimisation, Dollar-cost averaging and rebalancing; just to name a few.
Moreover, if an investor decides that they would like to set up their own Crypto Strategy in the future, they can easily do this by creating their own strategy page which can then either be set to private or public viewing.
Let's have a look at why the Blockchain Index Strategy is an ideal choice for UK investors.
Blockchain Index Strategy
Overview
Blockchain Index Strategy is one of the 200+ Crypto Strategies that are readily available for UK investors, and much like an index fund, investors who create an account on the ICONOMI platform can have access to an array of different cryptocurrencies.
To date, the amount of assets copying this particular strategy is around €8.79 million, which equates to 4162 users who currently invest.
Features
- Long-term focused/passively managed
- Invests in established blockchain-based projects with active beta components
- The Crypto Strategy is market-cap weighted
- Fix BTC and ETH weight
- Focus of investment selection is on nascent projects with potential strategic importance in the future distributed economy.
- Provides frequent reporting
Performance Track Record and Historical Data
- All time return: +2,066.11%
- Return (year): -15.46%
- Return (month): -2.59%
Fees (Set by the Strategist and covers their costs for education and expertise provided)
- Copy fee (Yearly) - 3.00%
- Performance fee - 0.00%
- Sell cost (per transaction) - 0.50%
Other Passive Investment Strategies
Other Crypto Strategies that may be of interest to UK investors include:
The Ethereal DeFi Strategy
- All time return: +807%
Alpha Digital Strategy
- All time return: +5,954%
Diversitas
- All time return: +3,127%
Conclusion
Navigating the intricate world of cryptocurrencies can be daunting, especially for regular UK investors. However, the benefits of investing in crypto funds are manifold, as they provide a diversified approach to investing in individual cryptocurrencies; whilst also offering a more streamlined way for people to enter the crypto market.
Among the available options, crypto index funds and strategy platforms have emerged as superior choices to ETFs, hedge funds and traditional asset management firms. Their easy accessibility, user-friendly nature, and exceptional long-term performance make them a highly appealing option. In this context, ICONOMI's Blockchain Index Strategy shines brightly, which not only offers a long-term position in an array of different cryptocurrencies, but is further enhanced by industry-leading features which create more surety for investors.
Suffice to say, if you are a UK investor who's looking to venture into the crypto world with a reliable and user-friendly platform, ICONOMI is an excellent choice.
So what are you waiting for?
Sign up now to take advantage of the wide range of investment opportunities available on ICONOMI, and level up quickly in order to develop your own investment strategy!
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