|
B. G., Opalesque Geneva: VanEck, a large ETF house, has a firm hold on the digital assets space. Nowadays, the firm manages $1.89bn in digital assets through 19 strategies. One of its products is Digital Assets Alpha Strategy (DAA), a long-biased liquid token strategy that aims to generate alpha through token selection and risk management.
Pranav Kanade is the portfolio manager. Before joining VanEck two years ago, he served as a credit portfolio manager at Millennium Management and head of research for liquid credit investing at Angelo, Gordon & Co. He will speak at the Small Managers - Big Alpha Episode 15 webinar on Tuesday 9 July (details below).
VanEck, a family-owned investment management firm headquartered in New York and founded in 1955, manages about $101.9bn (as of March 2024) through ETFs, mutual funds, institutional funds, SMAs and UCITS. It pioneered investing in foreign growth stocks and gold. The firm made multiple attempts, since 2021, to launch a spot Bitcoin ETF, until the SEC authorised it, along with 10 other applicants, in January this year.
VanEck Digital Assets Alpha Strategy
Within the digital asset fund universe, those strategies opting for a liquid and active strategy can choose between arbitrage, liquidity provision, trading and fundamental. DAA is using the latter, with a long-biased edge.
Fundamental analysis involves examining a company's financial statements and broader economic indicators to uncover a security's intrinsic value. VanEck first identifies projects through qualitative analysis, then identifies the key KPIs (key performance indicators) that drive the token of the security value, and makes assumptions and forecasts those KPIs to build a DCF (discounted cash flow) model. The manager then determines the valuation and decides on the positioning.
The Strategy owns and actively manages 10 to 30 digital asset tokens and securities.
It takes a risk-reward-based approach, with the flexibility to adjust for adverse market conditions. The net long exposure is 80-100% (but could be as low as 35-50%). The size limit for individual positions is 10% of NAV. The manager employs quantifiable downside hedging via selling to go into cash or options.
According to VanEck, the investible universe includes more than 24,000 tokens and roughly $2.67tln in market cap. The universe of digital asset securities includes 20 publicly traded global equities and $147bn in total market cap. The Strategy takes from both universes through a thesis-driven approach, a focus on cash flow and valuations, and positioning dictated by the macro environment.
The token is not the product, it's the accelerant for a great product, according to VanEck.
Unlike equity investments which offer ownership and voting rights in a company, token investments, especially utility tokens, focus on specific utilities within a network and might not grant ownership or voting power. Token investments have gained traction with the rise of blockchain technology and decentralised finance (DeFi), explains Wowsummit.net. Tokens can represent various digital assets, including cryptocurrencies, utility tokens, and security tokens.
The manager anticipates the $2.82tln global digital asset market to take a share from the $239tln global bond and equity market in the coming decade. Furthermore, they believe that less than 1% of the liquid token projects will generate over 99% of the returns. In other words, "most tokens will be worth nothing and will lose value but a small subset will accumulate a lot of value," says Pranav Kanade.
The five key investible themes include:
1. Core infrastructure (of blockchains, bridges and oracles…); according to VanEck, it is "the connective tissue between millions of developers and billions of users."
2. DeFi building blocks (including decentralised exchanges (e.g. Uniswap), liquid staking platforms (e.g. Lido), and more); "the core primitives forming the foundation of the on-chain economy."
3. Upgrading TradFi Rails: "Building the familiar TradFi experience on top of crypto rails represents an opportunity to upgrade the financial system."
4. Web3 & the Creator Economy, "adding an open and composable layer to the web2 internet & unlocking frictionless new experiences".
5. Decentralised physical infra (DePIN), "a new paradigm in bootstrapping and maintaining physical networks and competing against incumbent networks." Opportunities include wireless networks (e.g. Helium), mapping and road analytics (e.g. Hivemapper ), and more.
Two investment examples are Lido, a liquid staking solution for Ethereum and other proof of stake chains, and Render Network, which offers a decentralised alternative to cloud computing services that have become prohibitively expensive.
Upcoming webinar
Small Managers - BIG ALPHA Episode 15
Episode 15 of this ground-breaking webinar series presents you with another carefully screened panel of investment managers.
Who:
• Rick Courtney, CEO, Essential Realty Partners (ERP) - private equity real estate firm
• Laurent Jeanmart, chairman, The Katch Litigation Fund, Katch Investment Group
• Pranav Kanade, portfolio manager, Digital Assets Alpha Strategy, VanEck
When: Tuesday, July 9th at 11 am ET (4 pm GMT, 5 pm CET, 6 pm Riyadh, 7 pm Dubai)
Free registration: www.opalesque.com/webinar/
Related article:
24.May.2024 Active ETFs are growing in popularity; SEC approves Ethereum ETFs
VanEck Disclaimers
The VanEck Digital Assets Alpha Strategy (the "Strategy") entails significant risk and is not suitable to all investors. €The Strategy is not available to Retail Investors. An investor should consider the investment objective, risks, charges and expenses of the Strategy carefully before investing. There is no guarantee the Strategy will achieve its investment objective and investors may lose their entire investment.
Digital asset prices are highly volatile, and the value of digital assets, and the companies that invest in them, can rise or fall dramatically and quickly. If their value goes down, there's no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
See below important disclosures for Australian, New Zealand, Hong Kong and Singapore recipients regarding the VanEck Digital Assets Alpha Strategy.
THE STRATEGY IS NOT AVAILABLE TO RETAIL INVESTORS. FOR INSTITUTIONAL/PROFESSIONAL /WHOLESALE INVESTORS ONLY.
Australian investors
This communication, where viewed by Australian investors, is only intended for use by 'wholesale clients' as defined in the Corporations Act 2001 (Cth). The VanEck Digital Assets Alpha Strategy (Strategy) and its investment manager (Van Eck Absolute Return Advisers Corporation, a Delaware corporation) are regulated by laws which are different to Australian laws. This is general information only and not financial advice and does not constitute an offer or recommendation of any products or services.
VanEck Australia Pty Ltd ABN 52 137 160 528 (as Authorised Corporate Representative of VanEck Investments Limited ABN 22 146 596 116 AFSL 416755) does not provide personal financial advice and does not take into account your individual objectives, financial situation, or needs. Before making any financial decision, you should obtain independent financial advice tailored to your specific circumstances. Investing involves risk. Past performance is not indicative of future performance. The value of investments can go down as well as up. You should carefully consider the risks involved before investing. Any advice provided by VanEck Australia Pty Ltd towards Australian investors (as the case may be) is general in nature and is provided under the AFSL of VanEck Investments Limited.
New Zealand investors
This VanEck Digital Assets Alpha Strategy (Strategy) does not constitute a "regulated offer" for the purposes of the FMCA and, accordingly, there is neither a product disclosure statement nor a register entry available in respect of the Strategy. The Strategy may only be offered in New Zealand in accordance with the FMCA and the Financial Markets Conduct Regulations 2014.
Hong Kong investors
The contents of this presentation have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.
The VanEck Digital Assets Alpha Strategy (Strategy) has not been recognised or authorized in Hong Kong. Accordingly, the Strategy may only be presented in Hong Kong to persons who are "professional investors" as defined in the Ordinance and any rules made under the Ordinance or in circumstances that are permitted under the Companies (Winding Up and Miscellaneous Provisions) Ordinance of Hong Kong and the Ordinance. In addition, any prospectus documentation and any communication may not be issued or possessed for the purposes of issue, whether in Hong Kong or elsewhere, or as otherwise may be permitted by the Ordinance.
Singapore investors
The VanEck Digital Assets Alpha Strategy does not relate to a collective investment scheme which is authorised under section 286 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA") or recognised under section 287 of the SFA. The Strategy is not authorised or recognised by the Monetary Authority of Singapore (the "MAS") - no associated Shares/Units are allowed to be offered to the retail public.
This material has not been registered as a prospectus with the MAS. Accordingly, this material and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Strategy may not be circulated or distributed, nor may the Strategy be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than to (i) an institutional investor under Section 304 of the SFA, or (ii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
The Strategy may only be presented exclusively to persons who are sufficiently experienced and sophisticated to understand the risks involved in investing in the Strategy, and who satisfy certain other criteria provided under Sections 304 or 305 of the SFA and the subsidiary legislation enacted thereunder. This material is for general information purposes only and should not be regarded as a prospectus as defined in the SFA or information memorandum nor forming part thereof. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. In Singapore, this material may only be distributed together with the prospectus or information memorandum, which must be referred to for information on the Strategy.
Important information
Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
|
RSS
