Today, Fortuna Funds launched the Fortuna Hedged Bitcoin Fund (HBTC).
HBTC utilizes a bitcoin-focused strategy in order to offer long-term capital appreciation. The actively-managed fund has a net expense ratio of 1.75%.
The fund achieves bitcoin exposure through the use of bitcoin futures contracts. As such, it should be noted that HBTC does not invest directly in bitcoin itself. Given the complications of crypto regulation and storage, this can work in the favor of the fund.
Primarily, HBTC looks to invest in front-month bitcoin futures contracts on the Chicago Mercantile Exchange. However, the fund may also invest in back-month bitcoin futures contracts as well.
Risk-Conscious Bitcoin Strategy
Part of the appeal of HBTC comes through its dedication to mitigating volatility. This is done in part through the use of options overlays. These options include covered calls on bitcoin futures contracts or funds that seek bitcoin exposure.
The fund uses these options contracts primarily to help defend the fund from downside risk. However, these options can also help bolster HBTC’s overall return profile.
Additionally, the fund may choose to allocate assets to short-term cash securities. This can include both U.S. Treasuries and repurchase agreements. That being said, at least 80% of the fund’s net assets are expected to give exposure to bitcoin or bitcoin-related investments, be it directly or indirectly.
Considering bitcoin’s recent price performance, it could be fortuitous for crypto investors to adopt a more risk-aware approach. HBTC’s use of options contracts can help portfolios stay engaged with crypto while being mindful of potential volatility.
The fund’s actively managed framework only makes these management prospects more valuable. The flexibility of HBTC’s active portfolio team may prove to be a crucial factor as bitcoin’s price continues to shift.
For more news, information, and strategy, visit ETFdb.
