Blockchain Strategies Fund Review

We will talk about Blockchain Strategies Fund in this article. Let’s start with a getting-to-know.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

This includes if you have been proposed this fund and want a second opinion.

What is the Blockchain Strategies Fund?

The Blockchain Strategies Fund (BSF) is a Luxembourg Fund of Funds that specializes in blockchain and digital assets investments, such as cryptocurrencies, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), gaming, metaverse, Web 3.0, and Private projects.

The fund offers investors an opportunity to invest in digital assets with a diversified approach, aiming to trim unnecessary risk and volatility.

The fund achieves this through institutional-grade due diligence, which involves selecting the “best-in-class” fund managers, and investing across four core strategies. These strategies are identified to ensure that the fund invests in the most promising blockchain and digital asset opportunities.

The fund is actively managed, and its allocation and weighting are reviewed on a monthly basis to ensure that it remains on track to meet its investment objectives. It is an open-ended fund type.

What is an open-ended fund?

An open-ended fund of funds is a type of investment fund that invests in other funds rather than directly investing in securities like stocks or bonds. It is called “open-ended” because the fund continually issues and redeems shares based on investor demand.

So, there is no limit to the number of shares that can be issued. This allows investors to buy and sell shares in the fund at any time, and the fund can adjust its holdings to take advantage of new investment opportunities or changing market conditions.

As a fund of funds, it spreads its investments across multiple underlying funds, offering diversification and risk management benefits to investors.

One advantage of open-ended funds is that they offer investors flexibility and liquidity, as they can buy and sell shares at any time. However, this also means that the fund manager must be able to accommodate the inflow and outflow of investor capital, which can sometimes be challenging during periods of market volatility.

Additionally, open-ended funds may charge fees to cover the cost of managing the fund, such as management fees, administrative fees, and other expenses.

The subscription period for the Blockchain Strategies Fund is monthly, and the cut-off date for submitting subscription requests is the 20th of each month. Similarly, the redemption policy for the fund is monthly, and investors must provide at least 30 days’ notice before redeeming their investment. The cut-off date for redemption requests is also the 20th of each month.

The Fund was rolled out by investment management firm Block Asset Management in December 2017.

Who is Block Asset Management?

Block Asset Management was established in October 2017 by a team of experienced Financial Services professionals who shared a common interest in Blockchain Technology and Digital Assets. The team had extensive experience in various aspects of Fund and Asset Management, Fund Creation Services, Compliance, Private Banking and Fund distribution.

After some studying, Block Asset Management found that institutional investors were hesitant to participate in a single manager or strategy, despite the high level of interest in the Crypto area. As a result, the firm created the first blockchain/crypto fund of funds, i.e., the Blockchain Strategies Fund, to appeal to a wider range of investors.

What are the investment features of the Blockchain Strategies Fund?

The Fund offers multiple share classes to investors, including Class A, Class B, Class C, and Class I shares. Each share class may have different fees, expenses, and minimum investments, allowing investors to choose the option that best fits their investment goals and preferences.

Class A, C, and I shares are denominated in US dollars, while Class B shares are in euros. The minimum investment for Class A is 10 USD, while it is 10 euros for Class B and 100 USD for Class C. Class I requires the highest minimum investment at 500 USD.

The management fees for each class of shares are also different, with Class I having the lowest management charge at 1.50%, and Class A and B having the highest at 2.50%. Class C levies a 2% management fee.

Likewise, the performance fees also differ for each share class, with Class I having the lowest at 15% and Class A and B having the highest at 25%. Class C charges a 20% performance fee.

Who can invest?

This investment opportunity is not available to the general public. Qualified investors include regulated financial intermediaries, insurance institutions, public entities, and retirement benefits institutions with professional treasury operations, as well as companies with professional treasury operations. Additionally, high-net-worth individuals can declare in writing that they wish to be considered qualified investors.

You may get in touch with the firm to know the particulars of their qualification requirements.

How has the Blockchain Strategies Fund performed in 2022?

In the previous year, the majority of markets, particularly the cryptocurrency market, experienced a downturn. The Blockchain Strategies Fund was not immune to this trend and had a negative return of -12.33% in December. This was mainly attributed to the decrease in the values of Bitcoin and Ethereum, as well as poor performance in private equity and venture capital investments.

As a result, the total return for 2022 was a significant loss of -79.07%.

The decline in the market in 2022 affected some of the private equity/venture capital funds that the Blockchain Strategies Fund had invested in, particularly those affected by the downfall of FTX. This had a negative impact on the Fund’s performance for the year, but it should be noted that they also had a significant contributor to the Fund’s exceptional performance in 2020 and 2021.

Although the outcome is regrettable, it is not unprecedented, and most importantly, the Blockchain Strategies Fund sustained no long-term damage. So, it is possible that the Fund may not only reach but even surpass its previous high over the next cycle.

What are the benefits of investing in Blockchain Strategies Fund?

• Exposure to a diversified portfolio of digital assets: The fund invests in a diverse range of digital assets, including cryptocurrencies, tokens, and other blockchain-based assets. This provides investors with exposure to a variety of digital assets with different risk profiles.
• Active management and expertise: The fund is actively managed by experienced professionals who have expertise in blockchain technology and digital asset investing. They use their knowledge and experience to identify opportunities and manage risks.
• Potential for high returns: The blockchain and digital asset space is still in its early stages, which means there is potential for high returns. The fund’s past performance is a testament to this, with returns of +120% in 2020 and +328% in 2021, despite the challenging market conditions.
• Access to private projects: The fund has investments in private blockchain and digital asset projects that are not available to retail investors. This provides investors with access to potentially high-growth opportunities that are not available elsewhere.
• Liquidity: The fund is an open-ended fund, which means investors can buy and sell shares on a regular basis. This provides investors with liquidity and the flexibility to manage their investments as needed.

What are the risks of investing in Blockchain Strategies Fund?

• Market Risk: The value of cryptocurrencies can be highly volatile, and the prices can fluctuate rapidly. This can result in significant losses for investors.
• Regulatory Risk: The regulations surrounding cryptocurrencies and blockchain technology are evolving, and changes in regulations could have a significant impact on the value of investments in this fund.
• Cybersecurity Risk: The security of cryptocurrencies and blockchain technology is vulnerable to cyberattacks, hacking, and other types of fraudulent activities.

Blockchain Strategies Fund Review: Bottom Line

The Blockchain Strategies Fund may provide exposure to the potential growth of the blockchain and cryptocurrency market. If you are really interested in this space, this could also be a favorable investment.

Past performance is not a guarantee of future results, and the fund’s historical returns have been highly volatile. Before making any investing choices, you should give serious consideration to your investment objectives, level of comfort with risk, and current financial condition. If you want to make smart investing choices, it may also assist to consult a financial expert.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.