Today, digital asset management firm Coinshares has launched an index to track the performance of several cryptocurrencies—including Bitcoin—alongside that of gold. The index is now live on the Bloomberg Terminal.
Dubbed the CoinShares Gold and Cryptoassets Index (CGCI), the index is designed to provide investors exposure to cryptocurrencies, in a "risk-managed" way. The index comprises of 31.75% cryptocurrency in 5 equally weighted constituents, with the remaining 68.25% consisting of gold.
"Robustly researched and documented index products were the catalyst for institutional adoption of commodities in the late '90's through the advent of the Goldman Sachs Commodity Index," said Daniel Masters, executive chairman of CoinShares, in a press release. "This crypto and gold index aims to do the same, by using academic research and its benchmark regulated status to pass muster with even the most stringent investment committees."
The CGCI looks to build upon existing crypto indices by employing modern portfolio theory. The aim is to create a diversified fund by countering the volatility of cryptocurrencies with gold, a low-risk asset.
Testing the hypothesis, CoinShare’s conducted a study in conjunction with Imperial College London. The research concluded that the pairing of gold and cryptocurrencies could deliver a better “risk-adjusted return profile” than simply holding gold or cryptocurrencies alone.
“The CGCI is the product of nearly two years of research, development and experimentation conducted by Imperial in close collaboration with CoinShares,” said Professor Will Knottenbelt, director of the Imperial College Centre for Cryptocurrency Research and Engineering. But it will need another two years to test if it's successful.