On 28th August, Morgan Creek Capital Management, LLC, an SEC registered investment management services announced their collaboration with Bitwise Currency Index Fund to launch their very own cryptocurrency fund. The digital asset index fund will offer exposure to the top 10 largest cryptocurrencies such as Bitcoin [BTC], Ethereum [ETH] and Bitcoin Cash [BCH]. However, XRP did not make it to the list.
The fund will have a minimum buy-in of 50 thousand dollars that is designed to attract institutional investors. Mark Yusko, the Founder, and CEO of Morgan Creek in an interview with CNBC stated that he is seeing strong interest from endowments, pension funds and family offices who want to better evaluate investment opportunities.
Morgan Creek has confirmed that they will store the cryptocurrency offline [also known as cold storage] and conduct annual audits so as to calm investor concerns around safety. The firm has further stated that they will use third-party custody to alleviate such worries. The announcement comes after Bitcoin saw a hike in its price with the cryptocurrency trading at more than $7000, numbers the digital asset has not seen since the beginning of August.
Mark Yusko regarding the new venture said:
“It’s been a great transition for us. We started off investing in the ‘picks and shovels’ and then into venture capital. We looked into companies laying the groundwork for cryptocurrencies to function better and for security tokens to emerge.”
He then added:
“We looked for a world-class provider solution in cryptocurrency and decided to partner with Bitwise to create this first digital asset index fund.”
When Yusko was asked what it was that caused him to keep to the sidelines until now, Yusko stated that custody is the issue that people are focused on in this day and age. Morgan Creek believes that there are some institutional quality custody solutions that are available and is being developed by firms like Coinbase, Northern Trust and so on and so forth. He further added:
“We are excited about this direction. We think we are early and we really want to be the trusted advisors to institutions in the cryptocurrency world.”
The Digital Asset Index Fund Breakdown for the Morgan Creek and Bitwise collaboration
- 69% Bitcoin
- 15.4% Ethereum
- 5.5% Bitcoin Cash
- 2.9% EOS
- 2.3% LiteCoin
- 1.1% Dash
- 1.1% Zcash
- 2.1% other
According to Mr. Yusko, the reason for not including XRP and Stellar in the list because the digital currencies are considered as pre-mined coins [“A coin that has been already mined before being set into circulation”]. Yusko stated that the decision was taken based on risk management. He said:
“Institutions don’t care so much about big returns, they want to manage risks. You know Howard Marks has been a friend and mentor for 25 years? He has this great line where he says, ‘if you want to be in the top 5% of all funds, like all the cryptocurrency hedge funds last year, you have to take an inordinate amount of risks and you could end up in the bottom 5 %.’ We’re not interested in that.”