What do you do if you cannot decide which share you wish to buy and when? Invest in a mutual fund. Mudrex, a US-headquartered but home-grown crypto asset manager, offers the same solution in the world of cryptocurrencies. Coming on the heels of the hugely-popular Bitcoin ETF, Mudrex – backed by Y Combinator and Nexus Venture Partners – has launched various Coin Sets. Each Coin Set is a basket of cryptocurrency coins. Think of a Coin Set as a mutual fund scheme.
What are Coin Sets?
These are portfolios of coins based on certain themes. For instance, a Coin Set called ‘Crypto Blue Chip’ is a basket of the top five tokens as per their market cap. There are thematic Coin Sets too. The ‘DeFi 10’ is a basket of the top 10 DeFi tokens. Similarly, a Coin Set called ‘NFT’ is a basket of the top six NFT projects, and so on.
A Coin Set distributes (invests) your money across the underlying coins in a certain proportion that it states upfront. For instance, the Crypto Blue Chip Coin Set diversifies across Bitcoin (BTC: 50 percent of your corpus), Ethereum (ETH: 33.68 percent), Binance (BNB: 6.32 percent), Cardano (ADA: 5 percent) and Ripple (XRP: 5 percent). At the end of every month, all Coin Sets rebalance their portfolios. Mudrex has about 15 coin sets spread across various themes, on offer.
For the slightly higher risk-taker, there are mid-cap versions as well – New Crypto Stars. The DeFi and Raging Bull coin sets are among the riskiest. They work just like sector or thematic mutual fund schemes.
Mudrex’s co-founder and chief executive officer, Edul Patel says that it will help investors manage potential risks by diversifying their portfolios in different cryptocurrencies.
“Coin Set is a logical extension of the crypto space. Usually, a lot of investors, after investing in large-cap crypto coins, are tempted to looking for other cryptos. They then get lost, as there are several listed tokens,” says Vikram Subburaj, CEO and Co-founder of Giottus, a crypto currency exchange.
Patel says that, at the moment, the firm’s research division internally designs all the Coin Sets, “but over time, we would host Coin Sets developed by external portfolio managers who would like to offer their Coin Sets to their own followers.”
Costs, charges and minimum investments
The minimum investment for a single Coin Set is US $100. There are no charges for now. You might need to pay charges to your crypto wallet. But Patel adds, “After about six months or so, we may charge a small fee, say 1 percent of the assets under management,” says Patel.
Investments in Coin Sets are liquid. Investors can withdraw at any moment and there are no withdrawal charges. “Tokens are always stored in the investor’s wallet and we do not take a custody of investments or have access to investments,” says Patel.
A Mudrex Coin set balances itself once a month to revert to its original asset allocation.
Patel says that the way Mudrex has been designed, no one except the user herself has access to her coins. Mudrex only has the power to trade in your coins, but it cannot own them. “We have no access for deposit or withdrawal. It cannot touch your funds at all. They are at all points only in your control,” says Patel. He adds that any trading that happens on your account takes place only through your strategy, the one that you authorise.
“The product offering from Mudrex looks innovative in this evolving crypto space,” says Rishabh Parakh, a chartered accountant and founder of NRP Capitals.
A Coin Set may sound like a slightly safer and better way to invest in cryptos than buying individual coins, but that doesn’t make cryptocurrencies any less volatile. Make sure you are comfortable with the volatility.
Also, there are close to 15 Coin Sets (and counting; as we go along). Make sure you understand where your Coin Set invests your money in. Mudrex has been around for around three years. The longer the track record, the better.
Should you invest?Subburaj believes that a 10 percent allocation (of your overall investment corpus) can be contemplated in cryptocurrencies, through avenues such as Coin Sets. A Coin Set works better than investing in individual coins, if you don’t know which one to buy, because it diversifies your money across different coins. But read up on your chosen Coin Set, before you invest in one. Some crypto exchanges also offer a passive basket of cryptos to invest in.