Last week the index provider, CF Benchmarks, that guides the Arxnovum Multi Crypto Index Fund and Arxnovum DeFi Index Fund announced changes to the index constituents as part of its semi-annual reconstitution.
The CF Diversified Large Cap Index, the underlying index to the Arxnovum Multi Crypto Index Fund, experienced the biggest change expanding the number of constituents from 11 to 16. Changes to the index will be effective September 1 and will include the addition of:
- Ape Coin (APE)
- Avalanche (AVAX)
- Internet Computer (ICP)
- Litecoin (LTC)
- Shiba Inu (SHIB)
In our opinion, this nearly 50% increase in the number of holdings should be seen as a positive for investors in the fund for the following reasons:
- increases diversification
- reduces idiosyncratic risk
- indicates that the crypto markets are maturing as 16 constituents now fall within the 95th percentile of the market
Meanwhile, the CF DeFi Composite Index, the underlying index to the Arxnovum DeFi Index Fund, will have two additions and one removal. The big change here is the removal of Amp (AMP) for reasons that relate to the regulatory scrutiny it has recently come under, see our blog on this subject from earlier this month for more details. The index will add 1inch (1INCH) and Avalanche (AVAX).
In order to achieve each Fund’s investment objective to track these underlying indices, we are planning to implement these changes to our funds inline with the index reconstitutions next week.
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