Digital asset management company Coinshares has released an index to track the performance of several cryptocurrencies – including bitcoin – alongside gold. The index is already active at the Bloomberg Terminal.
Dubbed the CoinShares Gold and Cryptoassets Index (CGCI), the index was designed to provide investors with exposure to cryptocurrencies, with “risk management”. The index consists of 31.75% cryptocurrency in 5 constituents of the same weight, with the remaining 68.25% consisting of gold.
"Indices were catalysts for institutional commodity adoption in the late 1990s, with the advent of the Goldman Sachs Commodity Index," said Daniel Masters, CoinShares executive president, in a press release. "This cryptocurrency and gold index is intended to do the same, using academic research and its regulated reference status to be approved by even more stringent investment committees."
CGCI seeks to take advantage of existing indices, employing modern portfolio theory. The objective is to create a diversified fund, fighting the volatility of cryptocurrencies with gold, a low risk asset.
Testing the hypothesis, CoinShare conducted a study in conjunction with Imperial College London. The research concluded that pairing gold and cryptocurrencies could offer a “risk-adjusted return profile” better than simply keeping gold or cryptocurrencies alone.
"CGCI is the product of nearly two years of research, development and experimentation carried out by Imperial in close collaboration with CoinShares," said Professor Will Knottenbelt, director of the Imperial College Center for Cryptocurrency Research and engineering. But it will take two more years to test whether it will be successful.
* Translated and republished with authorization from Decrypt.co
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