Beginner’s Guide to Crypto Mutual Fund Investment

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Have you thought of gathering investments from different investors, for a sole purpose of investing in shares, bonds, treasury bills etc.?

These altogether, are known as a portfolio of investments.

The profit derived from these pool of investments, are shared to investors in the funds annually, semi annually or as stipulated in the mutual fund prospectus.

Now that you’ve known what the term ‘Mutual Fund‘ really mean, let’s continue with discussing about how it relates to crypto assets, and how you can do cryptocurrency mutual funds investment to meet up with your financial goals.

Now let us start by learning what mutual funding really mean.

Shall we?

What is cryptocurrency mutual fund?

Mutual Funds

Cryptocurrency Mutual funds simply, are opportunities for inexperienced investors to make profit without getting involved in the risk of their investments.

All that is required from a user of such investment is to choose a management company based on its rating, and any type of crypto asset investment from the financial sector, reliability of fixed instruments – which is always guided by some considerations.

In other words, cryptocurrency mutual fund arises under the administration of an investment firm or financial investment organization that manages their existing customers crypto assets.

They conduct some sort of crowd fund raising by allowing prospective investors to invest their asset with which the mutual funds company will co-invest proportionally in a model of cryptocurrency investments.

The investment profit/loss are then shared or divided among the members of the investment portfolio, based on the proportions of cryptocurrency assets invested by each member of the portfolio.

The quarter of this kind of investment is basically within months or yearly terms.

Who operates mutual index funds?

Mutual funds firms are operated by professionals who are savvy with digital currencies, or capital market as well as cryptocurrencies.

These are people like business magnates (e.g. Bill Gates, Warren Buffet etc.) that knows how to short sell digital tokens to make huge profit from the price declination

In terms of crypto assets, mutual funds are always managed by firms that has qualified cryptocurrency investment experts, who knows how to choose the right cryptocurrencies to invest in and make profit.

How are digital mutual funds investment realized?

Cryptocurrency investments fund companies mostly have chosen ICOs, which prospective investors will need to buy tokens to have a stake of share in the placement of each investment portfolio.

These Initial Coin Offering tokens are mostly associated with the investment fund’s firm cryptocurrency, which any additionally made income from the release of the token is shared based on proportions of investments as dividends.

The tokens are determined either on the official website or a designated exchange.

When for instance an investor doesn’t need the investment services anymore, the acquired share of that particular token assets can be sold at the current market price rate to the company that is obliged to buy it.

However, taking part in the ICO have advantages in form of discounts on early released tokens.

At the same time, you may earn high profits if the cryptocurrency value of that particular start-up increases due to its popularity in the market, and is mostly based on the potential of the cryptocurrency to attract more investors after the initial release.

What are the legal terms of mutual fund management?

According to ETF legal standpoint, a share is a security provided by an investment portfolio of financial instruments.

Firms or companies that accepts such deposit are supervised by the central banks or any other authorized government agencies, which control the exchanges.

In case of foreign markets, they are indicated by the ETF marking, while their shares are traded on world cryptocurrency exchange or trading platforms.

Note: Have it in mind that most developing countries don’t even allow cryptocurrency mutual funding, as they believe that, mutual fund investment can result to fake investments.

Choosing the best cryptocurrency mutual investment fund

Mutual Funds

Purchasing digital investment funds, it’s easy to simply open a purse and provide your email address.

Cryptocurrencies gets rid of borders in many cases, as the simplicity of the deposits has serious disadvantages, in which most scams are based on the anonymity of transactions, and that allows unscrupulous managers to run or disappear mutual investors funds.

The lack of legislative protect can help such managers to make away with such investments.

In other words, when choosing a mutual fund, you have to rely fully on the reputation, as well as the personalities who organized such investment fund-raising firms.

Reputation in this cryptocurrency space are related to past successful projects, so you should not trust your cryptocurrency investment in the hands of unknown people or newcomers with dubious past.

Many may claim to be the Wall Street Financiers who came from famous hedge funds, but if you research closed and look deeply you will find out if they’re saying the truth or just impersonating someone else to achieve their scam tactics.

Pay good attention to their transparency, and trading reports.

ICO investments can make you good amount of money, but yet, they’re quite risky as the cryptocurrency world also bears many types of scam and all other risky activities.

I will suggest you always invest a little initially, then prepare for lose. You can make profit or loss, but it all depends on the legitimacy of the hedge fund company and its reputation.

Hybrid investments with the mix of cryptocurrencies and shares of blockchain technology companies are the ideal option.

Risks involve in doing crypto funding

ETF funds are required to issue shares as securities, which gives regulators the right to automatically recognize such tokens of companies oriented to the cryptocurrency market.

The US and other developed countries impose bans on distribution of any digital currencies with signs of shares. Such bans concern not only newly created start-ups, but also companies that have been working with cryptocurrencies for many years.

Usually, after the ban, they return money to investors. But tokens that are in trade on the exchanges will rapidly depreciate after the information on the project’s closure.

This can be avoided by selecting the fund in offshore jurisdiction, but this is a “deferred risk” for two reasons:

  • The struggle with digital currencies goes to the international level, which will make certain regulations binding on all countries;
  • Pressure on cryptocurrency exchanges makes them get rid of tokens with signs of securities, unexpected de-listing can affect the share’s value.

Mutual fund can be the best kind of investment for steady income stream, on your ROI (i.e. Return On Investment) over a long period.

It can make you wealthy, but there are mistake you should avoid when trying to invest in it.

Like I advised earlier, make you you research very well before making any investment, as you can loose huge amount of money, if you end up doing cryptocurrency investment on a bad fund.

Anyways, have a look at all the stupid mistakes you should avoid when doing mutual funds investment, if you really want to make huge income.

1. Timing mutual fund market

In the long-term investment, there is no perfect time to enter an investment. However, this mostly happens among the new investors in the cryptocurrency investment space.

Waiting for a perfect time to enter an invest is always known to be the worst investment strategy, and that’s the highest mistake most people make, while trying to invest in most mutual funds.

The best way to enjoy a market investment ride, is to invest your funds right away!

Don’t way for the perfect time, because you will simply miss-out on the supposed return on your investment had it been you invested earlier.

Forget about current events, don’t attach much of your interest in such events, as they’re always there, but people still make huge income while they’re happening.

2. Reshuffling your investment portfolio

Don’t ever reshuffle your investment due to FUD (i.e. Fear Uncertainty and Doubts). If you must reshuffle your investment portfolio, make sure it’s based on a solid reason.

Reshuffling of portfolio because of fake news, can erase your potential income on that particular investment.

3. Investment without plan

Investment must be ,made with a good financial goal in mind. But most beginner investors don’t even know about this particular point, and that is why they always fail to reach their desired investment goals.

For instance, make sure you target a specific amount of income you should be making at a particular time with any of the mutual fund investment you have already.

If that is not moving according to your target, you can simply opt-out by selling out your share of the tokens.

4. Panicking out of fear

Pressing too much of the panic button is mostly termed as ‘FOMO‘, which means Fear Of Missing Out in a particular investment.

This mindset have made many investors to loose huge profits, due to the fear that their investment is about to crash where as the opposite happens in the long run.

However, to make profit with mutual investment fund, you have to grow thick skin on investments before you can start raking huge ROI.

5. Investing in many mutual funds

This is a very risky tactics. Investing in too many schemes will not only become cumbersome to manage, but also become tiresome due to the fact that you have to keep expecting to make huge income by spreading yourself to thin on a mutual fund.

It is not advisable to invest in different category of scheme in the same fund as they carry their specific objectives.

Hence, you should always choose hedge investment fund categories to invest your cryptocurrency investment based on your personal risk profile and capabilities.

Make sure to always have your individual or personal financial goals set out to help you know when to call it quit, at the most appropriate time.

Mutual Crypto Funds List

The funds manage a total of more than $2 billion which is a considerable amount for a nascent industry that still has yet to see the turn of a decade. Below is a list of top 25 crypto funds, ranked in no particular order:

Polychain
Galaxy Digital Assets Fund
Blueyard
ICONOMI
Logos Fund
Pollinate Capital
Metastable
Pantera
BlockTower Capital
ConsenSys Ventures
BB Fund
Tezos
FBG Capital
Blackmoon Crypto
BlockStack
Finshi Capital
Alphabet Coin Fund
Flipside Crypto
Target Coin
Mirach Capital
Science Inc.
BitSpread
Astronaut Capital
Blockchain Capital
Auryn Capital

Final thoughts

Cryptocurrency mutual funds investment can be a very good way of making money with your cryptocurrency investment portfolio, you also have to be very careful as most ICOs are scams waiting for their prey to fall their victims.

Before you invest in any digital investment or index fund, try to check their reputation based on the past successful projects.

Make sure their cryptocurrency will not be de-listed from the designated exchange after a short while of attracting investors to buy shares on the tokens.

Most cryptocurrencies do get de-listed from an exchange due to ban placed on the origin company due to its default on the legislative laws.

Always invest a little amount of your cryptocurrency asset, to avoid heavy lose.

Before doing any kind of cryptocurrency investment, make sure you secure your assets fully, to avoid loosing it all at an instance to theft or hackers.

I recommend using hardware wallets to hold your acquired assets, of which Ledger Nano X is one of the best you can use to store all your cryptocurrency tokens.


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Disclaimer: Being a cryptopreneur does not mean am also a qualified investment adviser, and may not have a vested interest in some projects, or businesses mentioned here. None of the content(s) on this blog is a licensed investment advice, nor is it an advice replacement from a certified financial planner.