Liechtenstein boutique Incrementum has launched the Incrementum Digital & Physical Gold fund.
The fund, which was launched in February, invests 75% in gold and 25% in cryptocurrencies, mainly Bitcoin. It has returned 30% since its launch.
The bandwidths of the crypto exposure are 10% and 40%, and up to 15% silver can be added to the gold allocation. The fund also practices ‘volatility harvesting’, an options overlay that aims to take advantage of crypto’s high volatility and add value through systematic rebalancing and option writing.
Portfolio manager Mark Valek (pictured) said: ‘We are convinced that adding a small allocation of crypto exposure to a traditional portfolio will add significant value over time. During this age of digitalisation, the case for a digital version of gold seems very sound, especially if one has understood the potential of a decentralised censorship-resistant blockchain.
‘However, the high volatility of cryptocurrencies like Bitcoin is a problem for many investors. Our multi-asset solution of bitcoin and gold is able to offer an exposure within risk parameters which traditional investors are able to handle and also dynamically takes profits via our investment process which comprises a regular rebalancing. Investors in the fund therefore do not have to deal with the crucial timing of a highly volatile asset, as it is constantly been rebalanced by the fund management.’
Incrementum believes that combining digital and physical gold creates a liquid product with a low correlation to traditional assets. The boutique has a particular focus on precious metals investing, and its management publishes a report called ‘In Gold We Trust’.
Valek said that gold is currently consolidating after being overbought in the short term and that setbacks of up to $1,700/oz cannot be ruled out. However, Incrementum sees setbacks as a chance to increase positions. The boutique also believes that writing puts can be a productive strategy due to higher volatility.