Jaltech’s cryptocurrency baskets: A secure and convenient cryptocurrency investment

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Jaltech’s regulated cryptocurrency baskets are diversified portfolios of cryptocurrencies managed by a team of financial professionals and cryptocurrency experts. Both baskets have begun the year in fine form, each up over 50% at the time of writing.

Investing in Jaltech’s baskets provides investors with numerous benefits, such as a diversified portfolio of expertly vetted cryptocurrencies that adapts over time to market trends, vastly simplified tax reporting, and an institutional-grade custody solution keeping investor holdings secure. By investing with Jaltech, investors also avoid the need to transfer funds to potentially risky cryptocurrency exchanges, and they can seamlessly implement a long-term investing strategy through Jaltech’s debit order option.

Source: Jaltech

Jaltech’s baskets are the index funds of the cryptocurrency market

John Bogle, the father of index investing, famously said: “Don’t look for the needle in the haystack. Just buy the haystack!” This philosophy has been embraced by the professional and retail investing communities alike in recent years, and it’s no secret why. Over recent decades professionally managed active funds have consistently underperformed passive approaches to investing over any reasonable timeframe. If the experts can’t beat the index, what hope does the man on the street have?

* Benchmarks: United States (S&P 500), Europe (S&P Europe 350), South Africa (S&P South Africa DSW Capped), Japan (S&P/TOPIX 150)
Source: S&P Global

Like the well-known S&P500, which tracks the performance of the 500 largest public US companies, Jaltech’s cryptocurrency baskets are rules-based investment products that aim to capture broad movements in the cryptocurrency market. Jaltech’s diversified approach contrasts with the highly concentrated portfolios held by many investors, in which a single asset close to the investor’s heart dominates their holdings. Regrettably, many crypto investors have been educated on the benefits of diversification through the idiosyncratic collapse of their favoured asset: in 2022, Luna and FTX Token holders were the most recent graduates from this class (both assets are down over 99% from their 2022 highs, with scant prospect of recovery).

Read also: Structured products combine risk management & upside exposure in unpredictable markets

A closer look at Jaltech’s Cryptocurrency Baskets

Large Cap Basket

The Large Cap basket holds 15 cryptocurrencies and is managed in much the same way the S&P 500 index is in that it is weighted by market cap and rebalanced quarterly. Holding only 15 of the thousands of cryptocurrencies on the market means that only the highest quality projects make it into the basket – helping avoid the scams and Ponzi schemes that often spring up in the sector. However, to guard against the portfolio being dominated by the returns of the most valuable assets (currently Bitcoin and Ethereum), a maximum weighting of 30% is applied.

Blockchain Technology Basket

The Blockchain Technology basket holds 10 of the top cryptocurrencies that fall within the exciting subset of blockchains with smart contract functionality. These blockchains can be viewed as powerful, general-purpose, decentralised computers atop which financial and all sorts of novel applications can be built.

If the Large Cap basket is comparable to the S&P 500, the Blockchain Technology basket is similar to a thematic index – which, for example, focuses on a specific subset or theme of equities like renewable energy or artificial intelligence.

Expert management

In addition to the index selection approach, which manages risk through diversification, Jaltech’s team of cryptocurrency experts assess each prospective inclusion against a set of proprietary qualitative and quantitative criteria to optimise for risk-adjusted returns. Notably, the Large Cap Basket was able to avoid the pitfalls of holding the aforementioned cryptocurrency, Luna. Other examples include the exclusion of Ripple (XRP), whose parent company is currently battling a US Securities Exchange Commission lawsuit.

Jaltech’s Large Cap basket did not have exposure to Luna’s breakneck gains… or the collapse

Source: CoinMarketCap.com (with Jaltech annotations)

The combination of an index-based approach with management against Jaltech’s criteria gives investors a diverse, risk-controlled investment into the volatile but exciting world of crypto.

Tax benefits

Over-and-above the benefits of having a professionally managed portfolio, Jaltech’s baskets greatly simplify tax reporting for investors.

Many cryptocurrency investors are unaware that every time they perform a crypto trade, it triggers a taxable event under South African law. This means that personally managing a rules-based portfolio that is occasionally rebalanced would require a detailed set of reporting as part of an investor’s annual tax returns.

With Jaltech’s baskets, the only time investors need to assess their tax liabilities is when the investment is cashed in.

  • Jason Welz & Chris McCormick– Jaltech Fund Management
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