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Coinbase Index Fund

blog.coinbase.com

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Re: Coinbase Index Fund

#211

Post by evrydayhustling »

Meekro wrote: post #103

For anyone wondering why this is better than just buying the coins yourself, here are some reasons: 1. Non-technical investors don't know which coins to buy. There are some genuinely good coins, and lots of scams, and they look pretty much identical to the untrained eye. 2. Non-technical investors don't know how to store coins safely. Words like "cold wallet" and "Trezor" don't mean anything to them. Even if they wan…

Disagree with all 4 of these:

1) They are publishing which coins are held by the index, so the choice of coins is being given away for free, not just to investors.

2) Coinbase's main product is a SaaS account that lets you buy the same coins without knowing how to manage a wallet - so you can implement the index and skip the management fee using an account with them.

3) Controlling administrative access to an account with a fund has the same challenges as controlling administrative access to a coinbase account.

4) Funds have to pass through taxable events to customer (other than some structures which must pay the tax themselves) -- the taxation doesn't disappear because it's wrapped by another entity. Plus, the prospectus shows that the Coinbase fund will only need to rebalance once a year when it recalculates available supply on Jan 1.

There's really no excuse for the high fees on this fund. It's 100 times easier to manage than a typical stock index ETF, which must manage many more names plus dividends, splits, etc. And it charges 20x the fees.

Re: Coinbase Index Fund

#212

Post by evrydayhustling »

throwaway1748 wrote: post #161
ahtu123 wrote: post #81

Earlier quoted context omitted.

This "index fund" is made out of four currencies, BTC, ETH, LTC, BTC cash. Just buy a bunch of those and you're "investing" in their "index". Also you don't have to pay their fee for their immense expertise in putting this together.

I imagine fund investors will get instant exposure to any new crypto asset listed to coinbase or gdax. Which might be worth the price of admission alone if you think Coinbase listing an asset has the potential to drive the price up

Nah, the fund starts trading only 5 days after trading becomes available on GDAX. From the methodology paper: "Each reconstitution will occur at 5pm Pacific Time on the fifth day that the new asset is traded on GDAX. This is designed to reduce the effect of any temporary price volatility in the new asset in the first few trading days after its listing."

Re: Coinbase Index Fund

#213

Post by evrydayhustling »

JumpCrisscross wrote: post #50
paulgb wrote: post #30

Earlier quoted context omitted.

The transaction costs would probably add up to more than 2% depending on how accurately you wanted to track the index, plus it sounds like a bunch of work. (Edit: I'm not saying it's actually worth 2%, which seems excessive)

The index they track reabalances annually [1]. [1] https://am.coinbase.com/documents/cbi-methodology.pdf 6.10

And, since those rebalances reflect only relative changes in supply, the turnover should be a small fraction of AUM.

Re: Coinbase Index Fund

#215

Post by mlerner »

I work at Bitwise Investments (venture backed by Avichal Garg - a YC partner), and some people know us as "the first cryptocurrency index". We think Coinbase releasing an index is great for the space - diversification is super important for a crypto portfolio and it is good to see other people working on the problem. We offer a different basket (Coinbase only offers the coins available on Coinbase), have different business model incentives, and different focuses.

If investing in a diversifed portfolio seems intriguing to you, and Coinbase's offering doesn't fit your needs, you should check us out: bitwiseinvestments.com

Also, we're hiring!

Re: Coinbase Index Fund

#216

Post by mifeng »

mifeng wrote: post #208
justinalanbass wrote: post #61

I have attempted to duplicate this index fund manually by purchasing the top 25 cryptocurrencies (market-cap weighted) over the past year or so. I'll say that it was hardly worth the enormous work involved, and these index funds cannot come soon enough to non-accredited investors. In some cases it's not possible to do perfectly alone: NEO has a minimum unit of 1 coin, and so if you wanted it to not be overweighted, y…

If you want to buy this Coinbase index fund, just do this: 1. Log into Coinbase 2. Buy [BTC, ETH, BCC, LTC] with [62%, 27%, 7%, 4%] weights 3. Check back in one year and rebalance That's it! As an added bonus, you just avoided 2% fees and can "redeem" anytime.

Edit: don't do this on coinbase, buy on GDAX instead (same login as coinbase)

Re: Coinbase Index Fund

#218

Post by mlerner »

JustAnotherPat wrote: post #74
justinalanbass wrote: post #61

I have attempted to duplicate this index fund manually by purchasing the top 25 cryptocurrencies (market-cap weighted) over the past year or so. I'll say that it was hardly worth the enormous work involved, and these index funds cannot come soon enough to non-accredited investors. In some cases it's not possible to do perfectly alone: NEO has a minimum unit of 1 coin, and so if you wanted it to not be overweighted, y…

>Coinbase Index Fund will invest in assets in proportion to their relative market capitalizations and rebalance annually on January 1st. This thing is rebalanced only once a year. Would take 5 minutes to actually duplicate this fund since it's only 4 coins....

The Bitwise HOLD10 (run by Bitwise, where I work) rebalances every month.

Re: Coinbase Index Fund

#219

Post by [deleted] »

Meekro wrote: post #103

For anyone wondering why this is better than just buying the coins yourself, here are some reasons: 1. Non-technical investors don't know which coins to buy. There are some genuinely good coins, and lots of scams, and they look pretty much identical to the untrained eye. 2. Non-technical investors don't know how to store coins safely. Words like "cold wallet" and "Trezor" don't mean anything to them. Even if they wan…

[deleted]

Re: Coinbase Index Fund

#220

Post by mlerner »

gigatexal wrote: post #18

Kudos to Coinbase for launching this but a 2% fee and the fact that Coinbase is far from being trustworthy in my book I am going to wait for when/if a company like Vanguard starts such a fund.

You should check out the Bitwise HOLD10 (where I work). We are backed by Naval Ravikant (Cofounder of AngelList and CoinList. Partner at Metastable), Avichal Garg (Part-time Partner at Y Combinator. Previously Director at Facebook), and Keith Rabois (former COO at Square: https://www.bitwiseinvestments.com/about
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