XBT Investments Limited is aiming to be the first Australian Bitcoin focused exchange traded fund.
XBT Investments Limited has been founded by BitFunds who are one of the first cryptocurrency asset managers in Australia. They are planning to list their XBT Investments Limited fund on the ASX via an initial private offering (IPO). XBT Investments Limited will focus 100% on exposure to Bitcoin by purchasing solely Bitcoin derivatives. This is an interesting strategy, as XBT Investments Limited will not be directly purchasing Bitcoin, rather trading Bitcoin future contracts that are cash settled or rolled over on expiry. This removes all custodian risks associated with purchasing, securing and then trading physical Bitcoin which is seen as one of the key risks associated with the digital assets investment class.
The initial NAV of XBT Investments Limited will be $1 with plans of their capital raising reaching a minimum of $30m with a maximum of $100m. XBT Investments Limited will charge a crypto fund management fee of 1.5% per annum of total assets under management while they’ve elected not to charge a performance fee for the fund. XBT Investments Limited choice not to charge a performance fee is inline with Index funds from other asset classes where little active fund management is needed as the fund has a passive approach to Bitcoin investment.
The derivatives XBT Investments Limited will invest in are likely to be Future Contracts which have been offered by CBOE Options Exchange and the CME Group since December 2017 who are both leading future exchanges in the US.
It will be interesting to see how XBT Investments Limited performs in relation to other Australian based cryptocurrency hedge funds. They’ll make an excellent benchmark Index for Bitcoin and something the more actively managed funds can use to determine their alpha returns.