Most hedge funds require a minimum investment and involve some kind of substantial lock-up period. That’s to say, if you want to participate, you’ll need deep pockets and a long term vision. We’re not talking penny stocks or flash-in-the-pan token sales here.
Curious, then, that hedge funds should find compatibility in a space that’s seen so much in-and-out investing until now. Not only does cryptocurrency and the blockchain open up investing for all, but it’s democratizing hedge funds as well.
How Does a Hedge Fund Work in a Token Framework?
Hedge funds within a token framework, like the APEX Fund, resolve issues of liquidity and reduce barriers to investing by making use of a FOF (Fund of Funds). This is a type of investment strategy that holds a varied portfolio of investment funds, rather than underlying assets.
The APEX Fund is tokenized by its APEX token, which is an ERC20 token running on the Ethereum blockchain. Investors can gain access to a range of options previously only in the domain of a privileged few, without raising huge sums of capital. And the lock-up period is removed as well.
Says Apex Fund CEO and Managing Partner, Chris Keshian, “Apex Tokens are freely tradable, meaning that you could trade your shares in the fund when the fund launches. There’s no lockup period. This is different from traditional funds where there’s usually a year-long lockup period, at least, on capital that’s invested. With the Apex Token, shares are liquid from day one.”
Leveling the Investor Playing Field
“For the most part,” says Keshian, “hedge funds have a high minimum requirement, at least a million dollars, which precludes most of the average investors from participating in these funds. For us, you can have multiple shares in the hedge fund and include a bunch of smaller investors. The tokenized framework allows the democratization of access to these top hedge funds, as any qualified investor can purchase $APEX tokens.”
What Will Make Apex Stay the Distance?
The cryptocurrency markets are changing and investors looking increasingly to the long term. It’s not the all night party and gigantic gains of 2017 anymore and investors need to be more sensible about their decisions. Says Keshian, “Any investor who wants exposure to this asset class is not going to be actively trading, and they aren’t taking short positions in the space. They probably don’t have the technical expertise or the capacity to do that. As this emerging asset class continues to mature, it is becoming harder for the average investor to realize gains, or appropriately select lucrative investments.”
Investors don’t have to use hedge funds, but they provide diversified exposure and expertise in a tumultuous market. “The alternative to just buying and holding crypto yourself is to invest in something like Apex where you’re just holding one token, and that token provides broad, diversified exposure to the leading trading strategies in the space,” Keshian explains.
“Each of these individual funds is shorting, doing arbitrage strategies, or similar things that still make money in a bear market. This exposure makes a compelling case to use Apex, especially when we’re in a bear market. By holding $APEX tokens, investors effectively have their capital managed by professionals, who are engaged with the crypto market full time.”