As per a press release made on 6th February, Invstr which is an investing application has introduced a cryptocurrency index for their platform which would allow users to keep track of cryptocurrency prices and updates.
Invstr’s crypto index would allow users to monitor price fluctuations related to the crypto market thereby enabling an investor to compare the price of the specific cryptocurrency pairs on a real-time basis. The index would also provide a list of digital asset categories which includes the token of the different sectors such as asset, payment and utility tokens.
Their weights in the index would be calculated as per the prevailing market volatility instead of their market capitalizations and would be enthusiastically adjusted every quarterly wise.
Invstr would only add new cryptocurrencies on the index once they have attained an adequate level of price maturity.
Kerim Derhalli, the Chief Executive Officer of the company, stated that:
“Retail investors want to know whether they should be invested in cryptocurrencies and what the impact of that investment will be on their portfolios. Traditional indices measure impact on the asset class not an investor’s portfolio. If you are a large fund manager you want to know what impact you will have on the market when you enter or exit an asset class. This is not a relevant consideration for smaller investors who want to know what the impact will be on their portfolios. The Invstr Crypto Index addresses this by using weightings that optimise risk-reward based on the volatility of the constituent assets”.
Further, all the cryptocurrencies which exist on the application would be reviewed every quarter that would be updated with the recent addition of any new cryptocurrency and remove the cryptocurrency which has been suspended or unstable from the index. However, few cryptocurrencies would get monitored such as Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH) and EOS on a more frequent basis.
Derhalli stated that the index would permit retail investors to consider the effect of the crypto investments with respect to their portfolio. He also said that traditional indexes would help to determine the effect related to an individual assets class but not with respect to their portfolio.
Derhalli further added that “Retail investors want to know whether they should be invested in cryptocurrencies and what the impact of that investment will be on their portfolios. Traditional indices measure impact on the asset class not an investor’s portfolio. If you are a large fund manager you want to know what impact you will have on the market when you enter or exit an asset class. This is not a relevant consideration for smaller investors who want to know what the impact will be on their portfolios. The Invstr Crypto Index addresses this by using weightings that optimise risk-reward based on the volatility of the constituent assets”.
The announcement made on the press release stressed on the advantages of diverse crypto options available to users and stated that “Invstr has analyzed the benefits of holding cryptocurrencies in a diversified portfolio. This analysis demonstrated that a modest exposure to cryptocurrencies in a diversified portfolio can both improve the return of the portfolio as well reduce the volatility of its returns. In choosing appropriate weightings for the index, the Invstr Crypto Index departs from traditional market-capitalization weighting methodologies and uses instead the volatility of each of the constituent parts.”