Developed by Crypto Finance Asset Management in collaboration with Vinter, an industry leader in digital asset index provider services, our two innovative crypto indices, the VCF Crypto Web 3.0 (VCFWB3) and Crypto Momentum (VCFMOM) indices, represent cutting-edge investment strategies in the rapidly evolving crypto market. While the VCFWB3 index explores the Web 3.0 ecosystem, the VCFMOM index leverages the momentum investment style while applying it to alternative data sets. Developed using a rigorous academic and data-driven approach, both indices stand as innovative pillars in the crypto investment space.
Performance Overview
After nearly nine months of operation, both the VCFWB3 and VCFMOM indices have exceeded expectations, showcasing robust performance that outpaces comparable benchmark indices. Positive feedback from industry peers and professionals further underscores the success of these indices, marking a promising beginning.
VCFMOM Index: Unveiling Fundamental Adoption Momentum
The VCFMOM index, a smart-beta product, capitalises on a momentum investment strategy with a strong quantitative focus, targeting assets with strong recent performance in terms of both price action and underlying activity. This index stands out as the first crypto index to integrate “fundamental adoption momentum” or on-chain activity data into its construction algorithm. This unique approach ensures investment in crypto assets with the fastest and most robust adoption growth, going beyond traditional price action. This combined approach results in a novel index methodology that goes one level deeper than existing dynamic strategies and provides in addition a level of strategy diversification within the same product.
Meticulously managed and rebalanced monthly by Crypto Finance Asset Management team, the VCFMOM index demonstrates adaptability to the latest and strongest digital asset trends. This approach has worked well, as the performance shows. Since inception, the index has increased by 79.7%* and has outperformed benchmark indices not only in absolute terms but also in terms of risk-adjusted returns (see Chart 1).
Chart 1
Source: Vinter Portal Data, Top 10 Basket = VINTER EQUAL WEIGHTED 10 INDEX
VCFWB3 Index: Embracing the Web 3.0 Paradigm
Designed around the Web 3.0 paradigm, the VCFWB3 index focuses on digital assets that emphasise the principles of Web 3.0, which include self-control and ownership of digital content as part of a decentralised model.
Web 3.0 marks a significant shift towards a more democratic digital ecosystem with enhanced user ownership, but more importantly, mechanisms to verify the originality and source of digital content. The VCFWB3 index captures this by including assets that are integral to the Web 3.0 infrastructure.
In order to define asset categories that are suitable for the notion of “Web 3.0” as explained here above, including assets in sectors such as Metaverse, DeFi, and Smart Contract Platforms, we work with Vinter, the index provider. Then, within this universe, each asset is given a score which is based on market cap, momentum, and social interest, with market cap being the most important.
To our knowledge, there is no comparable crypto WEB3 index in the market, but if we try to put its performance in context, we can compare it to Ethereum. Outperforming Ethereum by 80%* since inception with lower overall volatility (see Chart 2), the VCFWB3 index stands as a unique offering in the crypto market.
Chart 2
Source: Vinter Portal Data for Index and Yahoo for ETH data series
Strategic Opportunities: Tailored Crypto Exposure with VCFWB3 and VCFMOM Indices
Crypto Finance’s innovative crypto indices provide diversified and professionally managed crypto exposure for investors. The VCFWB3 is ideal for those with a strong conviction in the Web 3.0 trend, while the VCFMOM suits investors seeking a quantitative approach to participate in the growth of crypto assets with robust adoption and strong trends, all while ensuring diversification and risk control. Explore more at https://www.crypto-finance.com/products/.
*As of 14 January 2024.
