World’s first volatility managed Bitcoin mutual fund launched by Cboe Vest

World's first volatility managed Bitcoin mutual fund launched by Cboe Vest
Updated: 19 Sep, 2021
2 mins read

Institutionally-focused asset management firm Cboe Vest has launched the first Bitcoin mutual fund designed to protect investors from losses emanating from high volatility.

In a press statement, the firm noted that the Cboe Vest Bitcoin Strategy Managed Volatility Fund is informed by the recent increase in Bitcoin demand.

According to Cboe Vest, the new product will manage volatility by adjusting Bitcoin futures and cash allocations. The statement adds that the feature offers room for potentially minimizing the impact of drawdowns and poor market timing.

The fund manager will set the target levels for volatility as part of the managed volatility strategy. The approach aims to dynamically change the fund’s allocation to Bitcoin futures and cash investments.

Basically, in high market volatility scenarios, the fund will lower the exposure to Bitcoin futures. Elsewhere, a low volatility environment will see the fund increases its exposure to Bitcoin futures.

“Investors have been eager for access to Bitcoin, and until very recently were challenged to access Bitcoin returns in a brokerage account. However, the cryptocurrency’s volatility has been concerning to some investors. We set out to solve those issues, in a novel way. The Fund seeks to provides access to Bitcoin returns and minimize the impact of drawdowns, with the security and convenience of a mutual fund,” said Karan Sood, CEO of Cboe Vest.

Cboe Vest adds that regardless of the use of Bitcoin, interest in the asset has increased as an investment product. 

Bitcoin’s volatility concerns

Notably, the maturity of Bitcoin over the years has been hampered by high volatility swings. Most investors have potentially stayed away from investing in the asset over the years due to high volatility.

In 2021, Bitcoin led the crypto market to a sustained rally before plunging in value in May. The drop in Bitcoin’s price resulted in high volatility due to increased crackdown from regulators led by China. 

The cryptocurrency rally was inspired by the entry of institutional investors into the sector. For years entry of institutions into the crypto sector was hampered by the volatility challenge.

Worth noting is that the consensus among many crypto enthusiasts is that Bitcoin will quickly become a mainstream asset once the volatility is handled. 

After suffering high volatility in recent weeks, Bitcoin has embarked on a new rally trading at $46,632.

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.