Mobile trading technology platform Invstr has launched its Cryptocurrency Index to make it easier for everyday investors to follow the markets. Currently comprising 18 cryptocurrencies, the index features a range of categories, including asset, payment and utility tokens with their weights being calculated according to their respective market volatility rather than their market capitalization. The index will be adjusted quarterly.
Holding cryptocurrencies in a diversified portfolio with a modest exposure can both improve the return of the portfolio as well reduce the volatility of its returns. The choice of departing from traditional market-capitalisation weighting methodologies was seen as appropriate taking into account the high volatility in the cryptocurrency market.
Kerim Derhalli, Chief Executive Officer, said: “Retail investors want to know whether they should be invested in cryptocurrencies and what the impact of that investment will be on their portfolios. Traditional indices measure impact on the asset class not an investor’s portfolio. If you are a large fund manager you want to know what impact you will have on the market when you enter or exit an asset class. This is not a relevant consideration for smaller investors who want to know what the impact will be on their portfolios. The Invstr Crypto Index addresses this by using weightings that optimise risk-reward based on the volatility of the constituent assets”.
The Invstr Crypto Index will be freely available to Invstr app users who will be able to easily compare the price performance of specific cryptocurrencies against the overall index. Every quarter, the index may be subject to weight rebalancing, the addition of new and stable crypto assets, and the removal of suspended or distorted cryptocurrencies.
For the purpose of US-traded securities trading, including fractional trading, Invstr is partnered with US-based broker-dealer DriveWealth LLC, a regulated member of FINRA/SIPC.