Elwood Asset Management, a UK-based investment firm owned and founded by hedge-fund billionaire Alan Howard, is planning to launch a $1 billion venture in the cryptocurrency hedge fund space, according to a report published by The Financial Times on August 30th.
Elwood Chief Executive Officer Bin Ren disclosed to the Financial Times that the firm was working on a platform that would tailor portfolios of cryptocurrency funds for institutional investors.
According to the report, the new platform aims to address the volatility and security risks often associated with the crypto hedge funds. CEO Ren claimed that the objective was to provide investors with a selection group of vetted crypto funds have passed robust due diligence so that market participants can avoid “blow outs.”
Whilst the details of the new venture have yet to be finalized, it is noted that the platform would allow investors to specify their terms such as the risk level they are willing to take, the returns they expect, as well as their liquidity terms. In addition to that, it will also determine the potential correlation with other assets owned by the investors. As a result, investors will get portfolios specifically tailored to their needs.
Besides the fees the investors need to pay to access the underlying funds, they would also have to pay a certain fee to Elwood for using the new platform.
“I see this as a very big growth opportunity,” Ren said, adding that the new platform-style product could ultimately manage over $1 billion of assets.
Meanwhile, Elwood has been screening crypto hedge funds and has already identified up to 50 that “probably satisfy our due diligence.”
The new platform builds on Elwood’s previous work in the crypto space. Earlier this year, the investment firm launched the Elwood Blockchain Global Equity Index. The index, which is calculated by index provider Solactive AG, stimulates investment into both crypto and blockchain projects.
Elwood had also indicated it was planning to increase its cryptocurrency offerings as it announced the launch of a blockchain exchange-traded fund in partnership with Invesco, which would be listed on the London Stock Exchange.
Last month, Invesco Japan launched the Japanese domestic ‘Invesco Global Blockchain Equity Fund’, offering Japanese investors exposure to digital assets and blockchain technology. The fund will track the performance of the Elwood Blockchain Global Equity Index.
Prior to this, there had been other reports that also suggested Elwood was planning to launch a range of cryptocurrency products targeting institutional investors. Moreover, Alan Howard himself has a host of crypto investments under his belt, including in EOS developer Block.one as well as the ICE-owned digital assets platform Bakkt.
The new venture follows other billion-dollar-plus investments in the space. For reference, Telegram’s blockchain, TON, which is expected to be released in the coming months, raised over $1.7 billion.