Coinbase Index Fund

[Dcrets]

Hello all.  First post but been lurking and reading for a while.  I see Coinbase is launching an Index Fund.  Components are Bitcoin, Ethereum, Bitcoin Cash and Litecoin.  Weighted by market cap.  2% fee.  I've always been a long term investor.  Not really interested in trading short term.  I'd like your thoughts on this.  Thanks in advance.  Btw, it is for accredited investors so not for everyone.

[DikkieD]

Wasn't able to dive deep into the specifics yet, but in a glance this looks like a good step towards even better adoption of crypto among investors. We early adopters thrive by a rise of the overall market cap. This could be a way to attract new investors, those that are not into keep tracking of every dip daily, but indeed, long term investors.

[Silentsweeper]

 The fund will give investors exposure to all assets listed on Coinbase's institutional exchange. Investing in Coinbase Index Fund will only be available to US-residents. Only U.S. residents are legally allowed to invest.
 The fund is aimed at giving investors broad exposure to all of the digital assets listed on Coinbase's regulated exchange.

[odolvlobo]

You don't need an ETF when you have smart contracts: https://info.shapeshift.io/blog/2017/05/21/introducing-prism-worlds-first-trustless-portfolio-market-platform

[Hughesy26]

Wow I hadn't heard about this - thanks!

Surely this is great news for the price of big cryptos, so it's a self fulfilling prophecy of sorts? So if institutional investors buy a lot of this coin it will drive up the price of the coins in the index?

I think institutional investors are the key to getting the btc price back to ATHs and this story is definitely a step in the right direction

[sparkystacey]

The pros for this is it is a logical next step for a maturing market. Until now, everyone could trade, now higher end traders have futures and a single index to lure their large volumes of cash into this market. It has a minimum of $10K per investment and needs to be used by only accredited investors who have over $1M in assets or $200K in income every year. It is a smart tool to recruit large sums and keep them in rotation as index folks are "set it and forget it" type folks normally. Moves are done usually once a quarter.

The cons for this is it's not really something most mere mortals will use. Also, it is using only the 4 large coins that Coinbase supports, which already generally trend together. Its super top heavy on BTC (a whopping 62 percent, followed by 27 percent ether, 7 percent bitcoin cash, and 4 percent litecoin), which given the price for BTC will make it hard to appreciate. That obviously can change though.

IMHO, it's something to watch. If it gets used a lot, that shows this market is maturing much faster, and that is a good thing for us mere mortals who've been here a while. 

[Dcrets]

Yes, I was happy to find this.  It is perfect for me and my circumstances.  And it certainly is a good sign of the future of crypto.  I think it is just a matter of time before Fidelity, Vanguard and other mainstream brokerages have several indexes available along with some actively managed funds.  I've submitted my application to invest.  Waiting for further info.

[Thirdspace]

The fund will give investors exposure to all assets listed on Coinbase's institutional exchange. Investing in Coinbase Index Fund will only be available to US-residents. Only U.S. residents are legally allowed to invest.
 The fund is aimed at giving investors broad exposure to all of the digital assets listed on Coinbase's regulated exchange.

is this fund listed officially on US SEC? treated as legal traded fund?
if it does then it will be as secured as having stocks and options in an Investment Management
and if Coinbase is registered as investment company and follows the regulations, they cannot easily run away with investor's fund

[HabBear]

I'd like your thoughts on this. Btw, it is for accredited investors so not for everyone.

I think it's a very interesting option. It offers an altrnative for those that may think owning Bitcoin or anyone currency would be too risky for them to handle.

What this fund won't do, if it's a pure index, is minimize the swings of cryptocurrencies (unless they're diluting the fund's holdings).

Meeting the accreditor investor minimum will exclude a lot of potential buyers.

You don't need an ETF when you have smart contracts: https://info.shapeshift.io/blog/2017/05/21/introducing-prism-worlds-first-trustless-portfolio-market-platform

This isn't entirely true because Shapeshift doesn't allow you to buy cryptocurrency it only serves as a crypto-to-crypto exchange site.

But this does beg the question, what's the difference between my owning Bitcoin, Ether, Bitcoin Cash, etc. in my own personal portfolio in the same percentage of the index fund? The fees I'll have to pay to the index fund!

[Kakmakr]

This is currently only focused on US citizens, who are accredited investors. The guys with the big pockets and the supposed knowledge of how these things work. Coinbase made a smart move there, because they do not have the support base to handle a public index.

The problem is the 2% annual management fee, because other services charge a much lower fee.

I also saw this in their Index fund rules :

" The Securities and Exchange Commission has not passed upon the merits of or given its approval to any interests in any Coinbase fund, the terms of any offering of any Coinbase fund, or the accuracy or completeness of any offering materials of Coinbase funds. Interests in Coinbase funds are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their interests in any fund. "