Cryptocurrency index funds are attracting a lot of attention in the world of crypto investment and are set to be one of the hot topics for 2019. They represent an easy way into cryptocurrency because they allow investors to avoid the hassle and stress of actively tracking and managing their own portfolio of coins. The best index funds also help to spread risk by diversifying your investment across a wider selection of coins. This way, investments are protected somewhat from the volatility of the market.
Cryptocurrency Index funds work the same way as any other index fund you can invest in. Essentially, you buy shares in a fund. This fund is made up of a basket of different cryptocurrencies. So you are not investing directly in a particular coin, instead, you buy into the fund. The fund then invests your money across the basket of cryptocurrencies they follow.
The value of your investment then tracks this selection of cryptocurrencies, which can lead to better payoffs and reduced risk than investment in a single cryptocurrency.
By buying into a fund, you don’t need to worry about setting up wallets, tracking coin prices and trading coins through exchanges – this is all handled for you. Of course, this does mean a fee, which will vary from fund to fund. A higher fee does not necessarily represent a better-managed fund, so it is important to do your research! So, in the spirit of research, we wanted to look at some of the best cryptocurrency index funds that are currently available on the market in 2019.
Coinbase Index Fund
Coinbase has grown to become an industry leading exchange platform thanks to their user-friendly interface and trustworthy reputation. Looking to capitalize on this popularity and their huge user base, Coinbase now offers an index fund which currently tracks seven digital currencies: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ethereum Classic, Ox and Basic Attention Token (BAT). BAT is the newest addition, having only just been added to Coinbase’s trading platform in early November 2018.
