HFR Unveils New Cryptocurrency Indexes As Sector Booms

Dec 15 2017 | 8:18pm ET

Hedge fund industry index provider Hedge Fund Research has debuted two new benchmarks aimed at capturing the performance of hedge funds exposed to the exploding blockchain and cryptocurrency markets. 

The new measures, named the HFR Blockchain Composite Index and the HFR Cryptocurrency Index, are the first family of indices designed to capture performance of hedge funds investing in this rapidly evolving space, the company said in a statement.

The HFR Blockchain Composite Index will include funds that invest directly in blockchain technology, cryptocurrency or other emerging blockchain innovations, HFR explained, as distributed ledger technology makes fundamental changes to industries like payments, banking, finance, trading, healthcare, supply chains, identity and more. The index has two constituent strategies, cryptocurrency and infrastructure, that will track all funds actively trading cryptocurrency directly. Trading strategies are primarily macro in nature, including both fundamental and systematic trend-following approaches, but may also include arbitrage and momentum strategies, the company added. The HFR Cryptocurrency Index has annualized performance of +292% since inception and has surged +1,641% in 2017 through November.

HFR began tracking the first cryptocurrency hedge fund in 2013, though interest and growth in this area has surged in 2017 as a result of stratospheric price increases and broad proliferation of new coins via ICOs, as well as launches of listed futures contracts. In addition, trading platforms that enable trading and improve liquidity to these dynamic and evolutionary markets have expanded and become more secure. 

The new indices will be rebalanced quarterly and are investable through tracker funds operated by HFR Asset Management. Index performance reflects a universe of more than 20 products and is expected to expand rapidly in 2018, HFR said. 

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