On Monday, November 22, European-based independent fund and asset management company Incrementum highlighted the financial qualities of its digital and physical gold fund, which invests in both Bitcoin and gold.
The firm notably is steadfast in its long-held belief that Bitcoin and gold are mutually beneficial financial assets; indeed, it reiterated in the quarterly publication dubbed “Inflation Or Prosperity?” published in the European Investment Journal that Bitcoin and gold complement each other:
“Gold and cryptocurrencies do not have to be viewed as opposites at all. Of course, each has its advantages and disadvantages. However, they complement each other, and there is no reason to play one off against the other,” said Mark Valek, Partner at Incrementum AG.
The independent fund anticipates the role of digital stores of value to continue to grow; however, it does not expect Bitcoin to completely replace gold as a store of value in the near future.
Bitcoin & gold an effective investment strategy
The first investment plan of this kind handled by the Incrementum picked a strategic asset allocation of 25% Bitcoin and 75% gold. Thus far, its investment plans track record has produced remarkable investment outcomes that have met or exceeded its high expectations.
The firm’s approach has generated a return of 115.5% since the strategy’s launch on February 26, 2020, while gold has gained 10.6% during the same time and Bitcoin has gained 450.2%. After subtracting all costs, the method beat the static asset allocation by 28.6% on average.
Furthermore, the wealth and fund management considers that a combined crypto-gold portfolio seems to be especially well suited to manage the so-called rebalancing bonus due to cryptocurrency and gold’s low correlation and significant volatility difference.
Combining these two assets considerably decreased risk during the time under consideration, significant since the strategy outperformed gold by a substantial margin throughout the period.
The group stated:
“We are convinced that a combination of selected cryptocurrencies – especially Bitcoin – within a diversified investment portfolio makes sense. The results achieved so far by our investment strategy clearly underline this thesis.”
Bitcoin as an alternative to gold
As a method of safeguarding their money, an increasing number of fund managers and institutional investors are turning to Bitcoin (BTC) rather than gold. These investors believe cryptocurrency to be a greater store of wealth and inflation hedge than gold.
“Although Bitcoin and the underlying blockchain were originally designed to replicate the traits of gold that make it uniquely suited to be money, Bitcoin represents a unique asset class and can be an integral part of wealth management from the perspective of portfolio diversification,” Incrementum AG said.
After years of steady development, Bitcoin has gradually emerged as a viable alternative to gold as a store of wealth in 2021, as seen by the increasing value of Bitcoin. This year, Bitcoin’s ROI has outperformed the returns on major commodities, equities, currencies, and indexes.
It’s worth mentioning that the gold ETF outflow in October may have resulted from the newly authorized Bitcoin futures ETF in the United States, which allows investors to speculate on the price of BTC without actually acquiring any of the asset itself.
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