First Purchased Bitcoin
After two years of due diligence, IDX’s CIO purchased Bitcoin for the first time
A Digital Assets Pedigree
In the developing world of blockchain technology, we believe that a quantitative, data driven approach is the most prudent way to navigate the evolving landscape.
We approach the digital assets markets through this lens and build robust solutions for the asset class by optimizing for Risk Mitigation, NOT Return Enhancement.
At IDX we are focused on developing the world’s first family of Risk-Managed Digital Assets Solutions that make it simple for fiduciaries and investors to participate in the asset class.
IDX OVER THE YEARS
A brief history of our digital asset experience
What IDX Believes In
Volatility Can Be Favorable, But Not Without Downside Protection
Since Bitcoin’s inception, the growth of the asset class has only been rivaled by that of the internet and the “Dot Com” era. So, why have fiduciaries and professional investors approached the asset class with trepidation? Following our conversations with hundreds of financial advisors, family offices, and institutions, we’ve identified a pattern; downside volatility and principal protection are rarely a focus within the community of early adopters and practitioners.
Simple Access to Digital Assets for Fiduciaries and Wealth Managers
We began managing outside capital in the form of Separately Managed Accounts in 2019 with a dedicated focus on Risk-Mitigation, NOT Return Enhancement. Over time, the regulatory landscape has matured and the instruments available for gaining exposure to the asset class have evolved for the better. From our initial SMAs for fiduciaries, we created Risk-Managed Digital Asset Private Placements for accredited investors and institutions for Bitcoin, Ethereum, and DeFi. Now, we are proud to bring the first Risk-Focused US Mutual Fund to market, the IDX Risk-Managed Bitcoin Strategy Fund (BTIDX).
Constant Education and Research for a Rapidly Evolving Space
Similar to the ‘Internet Boom’ in the late 90s and early 2000s, digital assets have been subject to Moore’s Law, with new developments and improvements in technology (protocols) happening on a daily basis. Our research and investment teams are deeply involved in blockchain technology, evaluating our internally managed data (nodes), auditing the source code (smart contracts) of protocols, and participating in the ‘prudent’ development of the ecosystem. The fiduciaries who partner with IDX are able to benefit from these insights, and intelligently participate in the growth of the industry.
Why Does it Make Sense to Own (BTIDX)?
GROWTH AND VOLATILITY:
Since its creation in 2009 as a response to the Great Financial Crisis, Bitcoin has proven itself to be a resilient asset in terms of global adoption through market cycles, however, the magnitude of Bitcoin’s downside volatility (semi-deviation) has been considerably greater than traditional asset classes.
The chart to the left illustrates the total drawdown by asset class for Bitcoin, Gold, Real Estate, Stocks, and Bonds since 2009.
FREQUENCY OF DRAWDOWNS:
In traditional asset classes a “Bear” market is classically defined as a 20% or greater decline from recent highs amid widespread pessimism and negative sentiment. Many investors are surprised to learn that Bitcoin has commonly exceeded bear market territory, as classically defined, several times per annum since its inception in 2009. In addition to the relative frequency of bear market drawdowns, as compared against traditional asset classes (i.e gold, real estate, stocks and bonds, the severity of drawdown has exceeded 50% and even 80% thresholds several times during its existence.
The chart to the right illustrates both the periodicity and the magnitude of drawdowns for Bitcoin from inception in 2009 through July 20th, 2021.
How it works
The Fund’s manager, IDX, believes that the IDX Risk-Managed Bitcoin Strategy may provide investors with total returns over time, while reducing the volatility and the large drawdowns associated with passively owning CME Bitcoin Futures. Historical volatility is not necessarily indicative of future volatility, and therefore changes in market conditions, and other factors, might result in the actual realized volatility and drawdowns of the IDX Risk-Managed Bitcoin Strategy Fund (the “Fund”) for any particular period to be materially higher. The return of the Fund for any given period might be materially different than the returns of Bitcoin or CME Bitcoin Futures depending on the allocation decisions made by the Fund’s manager in its efforts to implement the Risk-Managed Strategy.
Additional Resources & FAQs
FAQs
How does a Bitcoin futures contract work?
Bitcoin futures contracts are “cash-settled” which means no actual bitcoin is delivered at the expiration of the futures contract. Rather, the cash difference is settled between parties. In order to maintain exposure over time, futures contracts must be “rolled” from one month to another. When outer month contracts are trading at a premium, the “term structure” is in “contango” and there’s a cost of rolling contracts.
How do Bitcoin Futures Mutual Funds differ from ETFs?
Bitcoin Futures-based mutual funds have liquidity once per day as opposed to throughout the day, as is the case with ETFs. To learn more about structural differences between the vehicles, click here to see an overview from our CIO.
Does the fund distribute a K-1?
No the Fund does not produce a K-1. Shareholders will receive a 1099 on an annual basis.
Does the fund invest in digital assets directly?
The fund does not own digital assets or cryptocurrencies such as Bitcoin (BTC) directly, the fund gains exposure via the CME Bitcoin Futures market and publicly traded Bitcoin Industry Companies. The fund also holds U.S. Treasuries and other cash substitute instruments.
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Distributed by Foreside Fund Services LLC, which is not affiliated with IDX Funds or IDX Advisors, LLC.
Ratings, rankings and awards should not be used as the sole basis for evaluating a fund. For more information including standard performance of the Funds, please visit the Fund page to download the fact sheet.
There are risks involved with investing including the possible loss of principal. Diversification does not guarantee investment returns or eliminate the risk of loss. Past performance does not guarantee future results.
Investors should carefully consider the investment objectives, risks, charges and expenses of the fund before investing. To obtain a prospectus containing this and other important information, please visit the Fund page to download a prospectus online or Click Here. Read the fund’s prospectus carefully before you invest.
Market Turbulence Resulting from COVID-19. The outbreak of COVID-19 has negatively affected the worldwide economy, individual countries, individual companies and the market in general. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks that apply to the Fund.
