- Index and product rebalanced at 17:00 CET, 31 August 2023
- Bitcoin Cash (“BCH”) was added as a new component to the index
- AuM growth despite sideways market
- Diversification into altcoins makes sense but bitcoin should be the core holding
The DDA Crypto Select 10 ETP went through its first rebalancing since DDA incepted and listed the product on Deutsche Börse Xetra on 22 June 2023. The index provider MarketVector released its quarterly review of digital assets indices on 28 August 2023, including the MarketVector Digital Assets Max 10 VWAP Close Index (“MVDAMV”), the underlying index for the DDA Crypto Select 10 ETP.
According to the index methodology, the index was then rebalanced to its new target composition at the end of 31 August 2023. Find out more about the index and index methodology here:
New Allocation as of 31 August 2023
From May 2023 (last rebalancing) until August 2023, the index (and therefore the product) composed of 8 constituents, Bitcoin Cash (BCH) was added to the index and the product during the August 2023 rebalancing.
Bitcoin Cash Added to the Index
The only addition to the index was Bitcoin Cash (BCH), a hard-fork of the original Bitcoin (BTC). In 2017, BCH developers modified the BTC code, releasing their software version, which split Bitcoin into two blockchains: Bitcoin and Bitcoin Cash. Bitcoin Cash is a result of a hard fork in the blockchain due to dissent in the community over Bitcoin scaling and the adequate block size.
Bitcoin Cash entered the index with a 0.5% weight (as of 31 August 2023) after surging in June. EDX Markets, a crypto marketplace backed by Wall Street powerhouses like Charles Schwab, Citadel, Virtu and Fidelity Digital Assets, added the coin to their platform giving retail and institutional investors alike the possibility to invest.
Positive AuM Growth Against Market Trend
Despite a negative market performance since inception (-4.1%), the DDA Crypto Select 10 ETP was able to gather significant inflows and increased its shares outstanding to 505,500 and AuM to USD 3.1M by 31 August 2023.
Performance of DDA Crypto Select 10 ETP
|DDA Crypto Select 10 ETP||-9.1%||-4.7%||n/a||n/a||n/a||-4.1%|
The top performing coin (and only component with a positive performance over the observation period) was Solana (“SOL”) with +22.1%.
|Top 3||Performance in % since last rebalancing (or inception)|
|Bottom 3||Performance in % since last rebalancing (or inception)|
There is no Second Best? The Advantages and Disadvantages of Portfolio Diversification
When investing into cryptocurrencies, it is important to consider that diversification – as in traditional capital markets – delivers a net benefit to investors. However, there are very few crypto assets that have managed to outperform Bitcoin over the course of various market cycles: So far, only Ripple (XRP), Dogecoin (DOGE), and Ethereum (ETH) managed to outperform Bitcoin (BTC) over two market cycles, i.e. managed to make two new highs in relative terms (denominated in Bitcoin).
In one of our previous research articles (DDA Crypto Espresso – Cryptoassets: There is no second best? The advantages and disadvantages of portfolio diversification), we have studied the alpha (outperformance vs bitcoin), beta (sensitivity of a token vs bitcoin) and the theta (time trend measured in days) of various cryptocurrencies.
The results were the following:
- most Altcoins are high beta and negative theta derivatives of Bitcoin (BTC)
- Binance Coin (BNB), Solana (SOL), Polygon (MATIC), and TRON (TRX) that exhibit a positive theta relative to Bitcoin (BTC)
- Altcoins do have a place in a diversified portfolio of crypto assets but Bitcoin (BTC) should be a core holding of the passive portfolio itself
When investing in crypto assets, it is therefore of utmost importance to consider the design of the concept. While other basket ETPs artificially cap the exposure to bitcoin, the DDA Crypto Select 10 ETP was specifically designed with the above-mentioned analysis in mind: Bitcoin needs to be the core holding of a passive portfolio; altcoins do have a place in a portfolio, but their weight should not be artificially inflated.
About DDA Crypto Select 10 ETP
|Product name||DDA Crypto Select 10 ETP|
|Ticker Xetra / Bloomberg||SLCT GY / SLCT|
|ISIN / WKN||DE000A3G3ZD0 / A3G3ZD|
|Underlying||MarketVector™ Digital Assets Max 10 VWAP Close Index (“MVDAMV”)|
|Product Structure||Physically replicating|
|Issuer||DDA ETP AG|
The material and information contained in this article is for informational purposes only. Deutsche Digital Assets, its affiliates, and subsidiaries are not soliciting any action based upon such material. This article is neither investment advice nor a recommendation or solicitation to buy any securities. Performance is unpredictable. Past performance is hence not an indication of any future performance. You agree to do your own research and due diligence before making any investment decision with respect to securities or investment opportunities discussed herein. Our articles and reports include forward-looking statements, estimates, projections, and opinions. These may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Deutsche Digital Assets GmbH’s control. We believe all information contained herein is accurate, reliable and has been obtained from public sources. However, such information is presented “as is” without warranty of any kind.