Index Reconstitution Announcement

Portfolio manager adding new pieces to a portfolio

Index Reconstitution Announcement

Index Reconstitution Announcement 2560 1092

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:

  1. increases diversification
  2. reduces idiosyncratic risk 
  3. 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.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.