Crypto ETFs: The Revolution is Coming

Exchange-traded funds are the world’s most popular financial product. Fifty percent of all investors hold some. But what makes them so popular? What are the advantages compared to single asset investing? And how could ETFs in crypto improve your portfolio? This article will dive into the advantages of ETF investing in the traditional AND digital asset arenas.

What are ETFs and their advantages?

An exchange-traded fund (ETF) is a fund whose shares are tradable on an exchange, like a stock. ETFs typically contain a basket of underlying assets and offer investors distinctive advantages, including:

• Diversification.
  Purchasing shares in an ETF gives instant exposure to multiple assets, spreading risk and simplifying the creation of a diversified portfolio.
• Rebalancing.
  As the underlying assets in the ETF increase and decrease in price, they start to shift in percentage inside the ETF. Therefore at regular intervals (typically monthly) the ETF is rebalanced, resetting the percentage per asset to their original weightings. This way, the investor sells high and buys low at every rebalancing event.
• Low cost.
  ETF management and operating expenses tend to be lower than other investment vehicles. The investor also reduces their fee expenditure, purchasing multiple assets in a single transaction rather than multiple transactions.
• Transparency.
  An ETFs holdings and weightings are disclosed publicly and regularly.
• Professionalized investment.
  Managed by experienced fund managers, all assets in an ETF are analyzed for safety and suitability.
• Simplified investments.
  The markets can be overwhelming for new investors and leave them spoilt for choice. With ETFs, much of the hard work has been done already. With professionally selected pools of assets, ETFs offer a very attractive product for both new AND veteran investors.
• Yield reinvestment.
  Certain assets within ETFs can be used to generate additional revenue. This is fed back to investors, either as dividends, or through reinvestment into the fund directly, increasing the value per share.

How will ETFs improve the crypto landscape?

It’s no secret that crypto trading is not for the faint hearted. High volatility and lack of regulation has created a “wild west” investment landscape. Crypto ETFs help mitigate risk exposure and provide a professional and diversified investment vehicle for every crypto investor. Reducing these specific risks (that are arguably the main blockers to mass adoption) will help foster a more inviting environment for traditional investors, and help push the inevitable widespread onboarding into a digital asset economy.

Yield staking, farming and lending are all major earners in DeFi. A crypto ETF’s underlying assets can be employed in DeFi strategies to generate additional revenue for the fund. This revenue can either be fed back into the ETF, or paid as dividends to its shareholders, or both.

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About Alvara

Alvara is a crypto ETF creation, trading and management protocol that is bringing the world’s most popular investment vehicle to blockchain. Alvara’s hybrid exchange, the HiveX, provides a framework for users to build, manage and trade crypto ETFs. Through NFT integration, fund managers earn a share of the transaction fees each time their fund is traded, and have the option of charging a management fee based on AUM.

Alvara is focused on facilitating mass adoption and accelerating the decentralization of the global economy through the delivery of a product that all investors can buzz with.

Welcome to Alvara. Welcome to the Hive.

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